Are you or a loved one considering Downsizing? One thing that you need to plan is Downsizing Finances
The goal for people downsizing is that they are going to sell their larger current home and downsize into a smaller, less expensive home. And here’s the goal, to have lots of cash left over that can go into financing their retirement.
That would be our goal for you too! We help baby boomers and above downsize out of their current home and right size into their new home.
So let’s take a look at the financial side of downsizing. One of the first key factors that you need to know is, what is your home worth? Knowing this value sets you up so that you can make informed decisions. Knowing the value is a crucial element, which means you need to hire a professional to help you with that. You can’t rely on online estimates. You should get an evaluation from either a reputable real estate broker or hire an appraiser. A real estate broker should be able to give you suggestions on some small, inexpensive tweaks that you can make that will help maximize the value of your home.
You will also need to calculate what your replacement home will cost. Home prices including condos vary in price depending on their location, condition, and size. We’ve had several clients who’ve taken advantage of Seattle’s higher property values and have moved out of the area or out of state to significantly less expensive places to live. We recommend that if you are moving out of the area to someplace that you are not super familiar with that you consider renting for a year. It would be a costly mistake to buy in a new area and then you ended up not loving it. We wouldn’t want that for you. If you are staying local in the Puget Sound area, we can help you determine what areas and housing would be a good fit for you.
You will also want to consult with your tax professional regarding any tax consequences you may have from selling your home. In general, if you’ve lived in your home for two out of the last five years, a single person can take up to $250 thousand in tax-free gains, and a married couple can take up to $500 thousand in tax-free gains, which is pretty cool.
We’ve given you a few things to think about as you start to plan on your downsizing. Feel free to reach out to us. We’re happy to help you in any way we can.
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