Buying vs. Renting as a Senior
Deciding where to live is one of the biggest decisions a senior could face especially after retirement. Whether to keep the family home you’ve owned for years or downsizing to a smaller home, or even ridding yourself of the stress accompanied by owning a home is not as easy as it sounds. The decision needs consideration of various factors that will affect you in the long run. The key factor is inheritance. If you have children and you want to leave the house behind for them, buying will be a better decision. However, the following are things to look at before deciding whether to buy or rent a home.
It is one of the key factors to consider while deciding whether you want to buy or rent a home. It involves determining how much cash you will be willing to spend while paying for taxes. Selling of your home as a senior means that you have already paid off the mortgage. Renting a home, afterward means that you will have to pay rent, which is inclusive of the landlord’s property taxes, and although it will be easy to cover this expense after selling your home, the rent is bound to increase over time.
If you decide to buy a home, the property taxes will be tax-deductible as will the mortgage interest, should you choose to finance the purchase. Most retirees will notice that while their income drops, so does their tax rate. Another thing worth noting here is that if you have a lot of money in your retirement account, the minimum distribution requirement is likely to push you into a higher tax bracket. This makes renting a viable solution if you can or have saved more than your tax savings.
If you sell your home for a big amount of cash and earn good profit in the process you will need to invest, rent or buy a second home. Investment is, therefore, something worth looking into because if you are capable, investing has good returns. A wise investment stands chances of success, and you can draw enough cash for your rent in a state-of-the-art apartment without even having to touch your initial capital.