Homeowners may choose to downsize for a variety of reasons. Maybe you’re tired of maintaining an older home, maybe you don’t need as much space anymore, or maybe you’re just ready for a change.
No matter the motivation, this is a big decision with many financial details involved.
Have you been thinking about simplifying and wondering if downsizing is the answer? Here are three questions to consider.
1. How much would downsizing cost?
If you own your home, you’ll pay a real estate agent’s commission to sell. And before moving, you’ll probably need to resolve deferred maintenance, do a deep cleaning and spruce everything up. This might involve painting, landscaping and staging.
The move itself will cost money, and if you’re buying a smaller place, you may pay mortgage closing costs. You’ll probably also spend money to personalize your new home with new furniture and decor.
2. What would it cost to stay?
The time and money you’ll spend to maintain your current place will add up over the years. Figure out your estimated costs. How do they compare to the costs of the new place you’re considering?
3. What’s the tax impact of downsizing?
Federal capital gains tax applies to a profit of more than $250,000 (single filers) or $500,000 (married joint filers) above your home’s cost basis when you sell. Also consider property taxes: Will they be higher or lower after you move?
These are just a few of the details to think about when it comes to managing and planning for your long-term comfort and stability.
Do you have any questions we can help with? Reach out anytime.