Downsizing? Don’t Forget About Closing Costs
Downsizing can be a great way for empty nesters to reduce overall housing costs and free up cash in retirement. Less square footage can mean lower utility bills, maintenance costs, and in many cases, property taxes. However, whether downsizing makes good financial sense for you depends on a number of factors, including where you plan to relocate and whether you plan to pay cash or finance your new residence. As you consider your options, don’t forget to factor in the costs associated with the sale of your home, specifically, real estate commissions and seller closing costs, which can take a significant bite out of your proceeds.
Real estate commissions
Seller closing costs
You also want to be aware of any potential tax consequences. Under the current tax law, you may exclude up to $250,000 of a capital gain realized on the sale of your permanent residence, or up to $500,000 if you file a joint return with your spouse.3 While most people will not have to pay capital gains tax on the sale, if you’ve owned your home for decades or live in a market that has experienced considerable appreciation in recent years, you could end up with a tax bill. That’s among many reasons why it makes sense to discuss your decision to downsize with your tax and financial professionals before that ‘for sale’ sign goes up.
If you have questions about how downsizing may impact your current strategy, let’s talk!
1 Wood, Kate, “What Are the Closing Costs for a Home Seller?” Nerdwallet.com, 8 JUL 2021, https://www.nerdwallet.com/article/mortgages/closing-costs-home-seller.
Community Colleges Expand Curriculum to Attract Seniors
If you’re thinking about downsizing or relocating in retirement, you may want to consider the benefits of living in a college town or a location with a growing community college. In recent years, community colleges throughout the nation have expanded their curriculums to appeal to retirees, with many offering substantial discounts or free classes and programs aimed at adults over 60. While you can always enroll in a degree program, many colleges have added non-degree programs in areas like art, history, language, music, culture, photography and cooking, as well as fitness-oriented programs such as yoga, swimming, and water aerobics. Even homebound seniors or those who don’t live near a community college can get in on the action thanks to the availability of online or telecourses available at many community-based institutions.1
Living near a community college can also provide access to experiences beyond traditional education. Many host art exhibits, lectures, and performances featuring a wide variety of artists across different genres and venues. These often include concerts, plays, comedy shows, movie nights, and more.
Participating in programs and activities through local community colleges can also provide older adults with greater opportunities for social and community engagement, especially those moving to a new location in retirement. That’s important because remaining mentally, physically, and socially active is believed to provide numerous benefits as you age.
Benefits of lifelong learning
So, whether you’re looking to learn a new skill or are simply seeking an evening of entertainment, be sure to check your local community college’s program and events calendar to see what interests you.
1 Chen, Grace, “Programs for Senior Citizens and Retirees at Community Colleges.” Communitycollegereview.com, 28 APR 2023, https://www.communitycollegereview.com/blog/programs-for-senior-citizens-and-retirees-at-community-colleges.
This information was written by KRW Creative Concepts, a non-affiliate of the broker-dealer.
This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
Retire Wise | August 2023
August 08, 2023|