You’ve retired and, one day, you and your spouse begin a conversation that goes something like this: “This has been a great family home, it’s full of memories. It’s just so familiar and paid for. But it needs some upkeep and may not be all that suitable for us as we age. What should we do?”
Your decision will depend on your personal situation but here are some considerations when it comes to decisions about retiring your home.
Renovate
Is it worth it? Some renovations hold resale value better than others.
Have you saved enough for a comfortable retirement and for a potentially expensive renovation?
Where will you live during a renovation that could take a considerable amount of time?
Sell and downsize
Are you prepared for the cost of getting your home ready to sell?
The sale will release the equity you have in your home and that could be very beneficial.
You could buy a downsized home – but at what cost? Your choices may also be limited, depending on the location and other personal requirements.
Sell and rent a home or apartment
It may be less expensive to rent than own.
You may then have freed-up equity for other uses.
Less upkeep
This may have appeal if you intend to spend significant time away from your rented residence (wintering in Florida, for example).
Other options
Rent part of your house to earn income. You will have to deal with your tenants of course and perhaps require renovations to your home – a separate entrance to a basement suite, for example. And the rental income is taxable.
Consider the potential tax consequences of a home sale. Selling may create a capital gain subject to income tax or the sale of your home may be tax free thanks to the principal residence exemption.
Home is where the heart is. It’s also where a lot of your money is. Talk to your professional financial tax and legal advisors about the best decisions for your financial future in retirement.
Andy Erickson is the division director with Investors Group, Vernon. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.