If you are getting ready to retire in the next few years, you are likely thinking a lot about how your financial investments and assets should be arranged to best make the big transition. And if you’re a homeowner, it’s also likely that your house is one of the most valuable assets you have (assuming you are free and clear of a mortgage or have a minimal balance left to pay). So, what’s the best way to handle that asset in retirement?
Should you continue owning your current home for years to come? Downsize to a smaller house that better suits your current lifestyle needs? Perhaps sell your family home and rent an apartment to get out of cumbersome maintenance tasks?
Today’s blog post will help you think about your answers to these questions, as we review some of the ways homeownership wins over renting in retirement for many. And, you may be able to get “the best of both worlds”—homeownership with nearly zero maintenance worries—when you come home to Zerbe’s Independent Living neighborhood here in beautiful Lancaster County!
Homeownership has Tax Advantages vs. Renting
According to financial planning experts, owning a home is “tax efficient” compared to other investments, like stocks, which will incur taxes on dividends and capital gains each year. But perhaps more importantly, property taxes you pay on your home may be tax-deductible, a big plus over renting. Rent payments are not tax-deductible.
No Continuously Rising Rent Payments
Another big “con” about paying rent is that leases tend to renew with a higher rent rate with each passing year. Some major cities, like New York, have “rent-controlled” buildings and apartment complexes, but those are rare in areas like ours here in Lancaster County, PA. So, if you rent locally, you may see your lease become much more expensive over the course of just a few years, which can be hard to bear in retirement.
If you are currently living in a home without a mortgage, the only regular costs you may have are property taxes and perhaps HOA fees. While taxes do rise over time, these increases tend to be modest year to year, which means you can plan for them. Additionally, your property taxes may be deductible from your yearly income tax bill, as we mentioned above.
An Ability to Make Income from Unused Space
If you decide to remain in your family home after you retire, you may find that you’re underutilizing space. Of course, depending on restrictions within your neighborhood or community, you could turn unused rooms into an income source by renting them out. Websites like Airbnb can help you find short-term renters, while other resources can help you advertise to longer-term tenants. You may also consider starting a home-based business.
The bottom line is, as a homeowner, you’re much freer to use your house as it suits your needs over time. Many landlords will restrict your ability to so much as redecorate, let alone allow you to run a business from your rental home.
Leave a Legacy for Your Family
No one likes to think about planning for the end of life, but as you enter retirement, it can be wise to consider how your assets will pass to your loved ones when you are no longer here. Real estate that you own, including a home that you love, can remain in your family for generations. Unfortunately, as a renter, you do not have this same legacy to pass along to your heirs.
Bonus: Homeownership in Lancaster County, PA Remains a Safe Investment
Not only has Lancaster County been rated as a top retirement spot for a number of recent years, but our general real estate market also has not faced the big swings that many others have nationally.
Home values may be a little more modest here than in some surrounding metros, but that has protected many homeowners from suddenly finding that their home is worth less than they paid for them. As a homeowner in Lancaster County, you can rest a little easier knowing that your investment in your home is a relatively safe one.
Are You a Homeowner Now Looking to Downsize? Zerbe Can Help!
No doubt owning your home in retirement has a long list of advantages—but there is nothing that says you need to remain in a home that’s no longer right for you. As you consider your living options in retirement, we invite you to discover our unique ownership structure in Zerbe’s independent living neighborhood, Woodland Heights.
The senior independent living experience we offer here at Zerbe Retirement Community is different from most other senior care communities. Your right-sized Woodland Heights home is a true investment that can appreciate in value! And we take care of most maintenance issues.
Through a condominium agreement with your name on the deed, we can offer a 75% return on the sale price of your independent living home to you or your heirs if/when you leave our community. That’s a better life at an exceptional value. Want to learn more? View our current homes for sale right here on our website or get in touch—we’d love to get to know you!