Should I sell my house and rent when I retire? This is a question I have been hearing a lot in the new year. In order to answer this question, let us look at some of the pros and cons to this decision.
PROS
Liquid Capital
Upon entering retirement, many people do not have a lot of liquid capital. If you sell your home and choose to rent, you have an influx of funds that can provide you some financial comfort.
Shifting Maintenance
When you own your own house or condo, you have to be prepared for repairs at any time. If you have lived in your home for a long time, you will appreciate that as a house ages, it will require more and more work. This can take time and money out of your retirement savings. If you choose to rent, your rental fees pay to have someone upkeep your property and amenities for you. This way, you can spend more time enjoying your home without having to worry about the financial burden of a leaky sink.
Downsizing
When you purchased the home of your dreams, it fit the lifestyle you were leading at the time. Often, when people retire, their children have moved out and the house becomes quieter. Instead of having extra rooms that are not regularly used but still need to be cleaned and tidied – why not consider renting a smaller space that fits the lifestyle you want to lead in retirement?
CONS
Instability
Owning a home comes with stability and control that renting does not. Each year your rent will increase, but that is not necessarily the case with a home. You also have more control to remodel a house or condo that you own than a rental.
Loss Of Equity
While renting means you can have more liquid capital, it also means that you no longer have an appreciating investment. Selling your only property / investment puts you in a situation where you no longer have an “in case of emergency” asset. The money you are paying in rent ultimately goes to someone else’s pocket.
Tax Benefits
Did you know there are a variety of tax benefits and credits that you can receive for owning a home? For example, there is the Home Accessibility Tax Credit which can help you claim up to $10,000 to make your home safer and more accessible. As people enter into retirement age, stairs, tubs and other features become more difficult to manage. You can offset these costs with tax credits. To learn about other tax credits available with home ownership, this guide will be very helpful to you.
Should I sell my house and rent when I retire? This is a difficult question to ask that is tied to a lot of emotions. Sometimes, financially it makes more sense to own. Other times, it makes more sense to rent. If you need help finding the answer to this big question, I would love to help you. If you contact me here, we can sit down together and map out what answer looks best for you given your own set of personal circumstances.
