downsizing
we are a retired couple thinking about downsizing. we own our home original purchased in 1979 for $75,000 and is now worth $525,000. looking at homes for around $400,000, does it make sense to pay cash, rent, or get a mortage? Thank you
Terry Says
The good news is that you won’t pay taxes on the gains when you sell your house, since on a joint return you can exclude $500,000 of gains on the sale of your residence.
Then your next decision involves too many factors for me to advise. First, figure out where you’d like to live. Then do a budget of projected costs, including property taxes and insurance. And decide if this is your “last” home — or if someday you might need additional care.
Downsizing involves more than just reducing your physical footprint. It should also downsize your cost of living. A high-rate mortgage on a new home probably won’t do that!
