It happens to all of us – we get older and the home we thought was our forever home now seems too big or it requires too much maintenance, and we start to think about downsizing. With the latest federal budget containing incentives for those aged 60+ to downsize through extending access to the superannuation contribution scheme, it’s time to look at the pros and cons.
Pros of Downsizing
- Government financial incentives – by mid-2022, anyone aged 60+ can sell their home and invest the capital gain into their superannuation, taking advantage of the tax rate and boosting their super outcome at retirement.
- Free up capital for use in investments, retirement funding or simply paying off the mortgage.
- Move to your dream location – beachside holiday living, urban convenience, relaxed rural or even overseas adventure.
- Create your ideal lifestyle – close to family and friends, village vibe, lots of amenities, resort style, over 55s community or even a mobile home to travel around the country.
- Age friendly design and layout – we never know what’s around the corner so it can be beneficial to look for a home without stairs, easy access bathrooms and low stress maintenance.
- Smaller homes cost less to run with cheaper insurance, utilities and council rates.
- Many apartment or townhouse complexes have amazing facilities that can include gyms, pools, tennis courts, even cinemas! You may never have to clean the pool again.
- Frees up housing stock for younger buyers with growing families.
Cons of Downsizing
- Letting go of the emotional connection to the existing family home can be difficult.
- Getting used to a smaller space with less room for extended family to visit and stay.
- Having to let go of excess furniture and belongings to fit into a smaller home.
- Moving away from friends and family
- Leaving your neighbourhood including the services you have come to enjoy and rely on like your family doctor, favourite restaurant, local shops etc.
- Having to pay fees and taxes that are associated with selling property.
- Possible reduction in the Age Pension – the more money you have in income or assets outside the family home, the less Age Pension you will be eligible for.
Top 10 Tips for Downsizing
- Talk to your local real estate agent about what’s available in your preferred location, the sales strategy for selling your home in order to maximise profit and the timing of the sale.
- Consider preferred lifestyle, location and style of home.
- Take into account possible health issues in the future and how that will impact style and location of your new home.
- Make the move while you are young and able enough to manage it yourself and make your own decisions. Be realistic about your future needs.
- Maximise potential profit by thinking like a buyer – make all repairs to the interior and exterior of your home including the garden.
- Declutter every room in the house and make sure you leave plenty of time to do it. Decluttering is emotionally and physically demanding.
- Eliminate the rooms you won’t have in your new home. You may be moving to a home with 2 bedrooms instead of 4, or you may no longer have a garage or garden shed. Almost everything in these ‘extra’ rooms/spaces will have to be relocated or removed.
- Consider giving legacy gifts or heirlooms early.
- If it all feels overwhelming, consider hiring a professional organiser/declutter coach to assist you with the process. Professionals will often help with selling items you no longer need or rehoming or recycling them.
- Once the clutter is gone, style your home for selling. Your local real estate agent is likely to have a list of professional stylists who can help with this process.
If you’re considering downsizing, the team at Walkom Real Estate can advise you on your sale and talk to you about options. Ask for a current market appraisal and start planning your ideal future. It’s never too late to make your dreams come true.