Author: Rhonda Underhill
Assisted living communities are designed to adapt to seniors’ changing care needs while offering individuals the privacy and freedom to live how they want. If you decide to make the move to assisted living, you can enjoy socialization opportunities, recreational activities, onsite medical care, and help with the various tasks of daily living.
But what do you do with your home? Should you sell it and move on? Leave it with family? Rent it out to cover your ongoing care costs? There are financial pros and cons to each option, so it’s important to consider your choices carefully.
Sell It
Before choosing an assisted living community, do your research and compare the atmosphere, amenities, and price of different facilities. The average cost for assisted living facilities in Florida is $3,150 per month. These costs can be difficult to handle on retirement savings alone, so selling your home may be necessary. Selling now will help you avoid paying capital gains tax on your profits and will also save you from paying the ongoing expenses to maintain your home while you’re not living there. If you need help selling your home, consider connecting with real estate services through Home Captain. This financial technology platform can walk home buyers and sellers through the purchasing and selling process.
However, if your home is on the older side, you may have to make a few pricey updates before you can find a buyer. Renters tend to be more willing to look past older features since they know they’re only staying temporarily. Finding tenants may also be a smart idea if you don’t need to sell your home immediately and you expect real estate prices to rise in the next few years. Since the housing market can be difficult to predict, Homelight recommends talking to an experienced real estate agent regarding the best time to sell your home.
Rent It Out
Renting out your home may help you pay for assisted living, but only if it’s profitable. Before deciding to be a landlord, Investor Junkie recommends ensuring that you can charge enough rent to cover your mortgage payments, utility expenses, property taxes, and insurance fees. If you’re unable to earn enough rental income to fully cover your stay in assisted living, make sure you have an alternative source of income or a substantial savings account. On the other hand, landlords get some significant tax breaks that can help offset some of these expenses. For example, you can deduct your insurance premiums, mortgage interest, property taxes, utilities, repairs, upgrades, and even expenses incurred for traveling to and from your rental home.
Keep in mind that renting out your home means you’ll assume the role of a landlord. Managing a rental property from afar can be challenging to say the least, so you might have to hire a property manager to take care of things for you. Property managers typically charge between 5 percent and 10 percent of your rental income, which can add up quickly.
Pass It On to Family
If you don’t need the money from the sale of your home, consider leaving it in the care of your loved ones. This is a great way to keep your home in the family without shouldering the monthly expenses or maintenance responsibilities. Plus, it will prevent you from leaving your home vacant and putting it at risk of theft, vandalism, or nuisance ordinances — some towns have laws in place that make homeowners responsible for the upkeep of their vacant homes.
Passing your property to your children while you’re alive can ensure you have a say in what happens to your home. However, there are some financial advantages and disadvantages to this move, so avoid making the rushed decision to gift the home or add your children’s names to the deed. You might end up paying significant taxes or risking that your property is seized by your children’s creditors if they fail to pay their debts.
When it’s time to move on from the family home, deciding what to do with the property can be tough. Don’t let anyone pressure you into making this decision right away. If you’re not ready, try to give yourself time to transition into assisted living before deciding what to do with your home. You’ll have a clearer picture of your financial and personal needs once you’re settled.
