Leaving your career isn’t the only big change your retirement may hold. It’s also possible that relocation, even just to a different home in the same town, is on the menu.
Deciding whether to stay in the home you own or selling to move to a new home or apartment is a big decision that requires a lot of consideration. You want to think about:
• Taxes: Many homeowners can completely avoid capital gains taxes on the sale of a primary home if their profit doesn’t exceed $250,000 ($500,000 for married joint filers). But there’s a catch. Not only must this be your primary residence (i.e., the one you live in) but you must have lived there for at least two of the five years preceding the sale. If you don’t yet meet these qualifications, you may want to wait until you do.
• The housing market: Selling a house is, in some ways, like selling stock. You don’t want to buy high and sell low. While it’s impossible to predict the moves of the housing market, you do want to sell during a strong market with rising prices, not a weak market with falling prices.
• Where you’ll live: After you sell the house, you have to find someplace else to live. If you choose an apartment or retirement community, make sure there are openings in the areas you want before you sell. If you decide to buy another home, townhouse or condo, make sure you’re buying a property you can maintain as you age and that you’re not putting yourself in a worse situation with a larger mortgage, higher interest and less secure residence with worse profit potential.
• New pressures: If your home is paid for, or close to it, selling and moving may add new pressures that you don’t need or want during your retirement years. Also, since a primary residence is often protected from creditors, it could be a risky move to sell and put the profits in your savings account.
What factors will you consider when deciding whether to sell your home after retirement?