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What Should Senior Citizens Know When Selling Their Home?

Friday, December 6, 2019   /   by Jo Skipper

What Should Senior Citizens Know When Selling Their Home?

What Should Senior Citizens Know When Selling Their Home?

This post can bring forward different emotions for everyone.  I’m going to try and keep this information to only important factors a senior and/or their family should consider when considering the sale of a home in the later years of life.  We all know the immense emotions that are involved in this process at this stage.  

There are many financial considerations when the option to sell a home arises.  This only becomes more complicated when the home being sold is most likely the family home and the last one you may ever be selling.  Many people don’t consider that medicare does not cover in-home care or assisted living costs for senior citizens. This can present an issue for many people later in life.  The largest asset that most people will ever own is their home so it is naturally the go-to funding source for the expenses that add up in the later years of one’s life. Other options exist as well such as renting the home or a reverse mortgage.  There are some important factors to consider in this situation:

Those who are moving into assisted living or nursing homes and have no intention of returning to their home, selling the home can make financial sense.  Also, if you have lived in your home for 2 of the last 5 years, you can be excluded from a certain amount of capital gains in the home sale. This depends on your marital status and how much the home has appreciated since purchase.  Senior citizens are no longer excluded from capital gains taxes in the sale of their home. This is a great time to speak with your tax professional.   

Many people who have lived in their homes for decades do not have the modern updates that the real estate market favors.  While the home could be in great condition, it may be faced with selling at a lower price due to the fact that many buyers prefer updated homes with less work to be done.  This can bring forth many emotions as the home has served a family for years, just fine! Before the time comes to sell, see if it is possible to start working on any deferred maintenance or updates if possible.  This can help increase the price tag of the home when the time comes to sell.  

Another option is renting out the home to pay for expenses.  This is something to consider if you have a low or no mortgage payment.  Also, there are other expenses to consider when using this option. Expenses such as property management and maintenance can add up quickly and need to be fully explored before this option is exercised.  Speak with a trusted real estate professional about the rental amount and expenses you can expect.  

The time will come for almost all of us when we need to sell a home we have loved for years.  It becomes more difficult when we need to sell this home to pay for care in the later years of life.  It is a must to speak with your Medicare/Medicaid agents, tax professional, and real estate professional when this time approaches.  Having these conversations will help you avoid unnecessary costs etc and help you keep your money in your pocket.  


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