The current economic situation and rising inflation is guiding future home buyers and sellers to research their options before making the big decision to move. Should you buy or rent? Should you move in with a family member or get a roommate? There are many options to consider depending on an individual’s financial situation.
To Rent or Not?
Renting a home is often the best choice for seniors past age 65 not only from a financial perspective but for practical and lifestyle reasons too. But buying makes more sense if you don’t have good rental options where you want to live and you have enough money to cover both the purchase price and ongoing costs of ownership. Your home might increase in value and you can save in federal taxes with itemized deductions, giving some financial benefits. The downside is that a substantial amount of wealth is tied up in home equity, there is ongoing costs of upkeep and upgrades, property taxes and insurance keep rising and home value can fall. Renting can also give tenants a chance to “try out” an area with flexibility to change to another community in the future.
Move In With Family?
This can sometimes require some renovations to expand the home in order to accommodate parents or children. It’s so important to plan ahead and discuss such things as lifestyle, cooking, babysitting, and individual privacy. How much of the cost will be shared for needed renovations? What happens if there is health care needed later on? Work out the specifics as to what will be reimbursed to you from the renovations if the house is sold later on. There is a lot to consider before making a decision on this kind of arrangement.
Roommate or Boarder?
Is it a good idea to take in a boarder or roommate to cut down on housing expenses? Yes, as long as you take important steps to help avoid unpleasant future scenarios. Be sure to screen tenants by asking for references and permission to run a background check. Insist on a signed lease with specific details such as whether pets are permitted, where to park, when rent is due, what areas of the home will be shared, and other important details. Use proper paperwork and keep records since rental income is taxable as ordinary income and must be reported to the IRS. With the proper tenant renting can be a great way to offset expenses and can come with social benefits as well.
There are various options for both the younger generation and seniors that include shared living, condos or townhomes, attached homes, a duplex or manufactured housing. The choices will depend on the individual financial situation and the desired outcome of making the change. Whether to rent or buy? Be sure to thoroughly research your individual situation before making your next housing decision.
Some information taken from an AARP article on Housing Decisions