David and I aren’t there quite yet but we may consider downsizing in the future. With roughly 15.1% of the population over 65 years of age, it is understandable that some of them are thinking of downsizing because they may not need the amount of space they did in the past. There is something to be said for the freedom acquired by divesting yourself of “things” that have been accumulated over the years but are no longer needed.
Moving to a less expensive home could provide cash that could be invested for additional income or savings for unanticipated expenditures. For Brentwood, Franklin, or Spring Hill, TN real estate, there are lots of options.
Savings can also be recognized in the lower utility costs associated with a smaller home, not to mention, the lower premiums for insurance and property taxes.
Going from the home where you reared your family to one of the new tiny homes may be a bit extreme but downsizing to 2/3 or 50% of your current home may certainly be reasonable. In some situations, your interests may have changed so that a different area or city might be a possibility. Can you believe the designs they have come up with for these little homes?
At one time, IRS had a once-in-a-lifetime exclusion of $125,000 of gain from a principal residence but it was changed so that homeowners are eligible for an exclusion of $250,000 of gain for single taxpayers and up to $500,000 for married taxpayers who have owned and used their home two out of the last five years and haven’t taken the exclusion in the previous 24 months.
Homeowners should consult their tax professionals to see how this may apply to their individual situation.