Current statistics put about 12.5 percent of the population over the age of 65. With a good amount of these “empty nesters” they might not need all the space of a larger home. Making a case for downsizing to a smaller home. With downsizing, you are saving money and maybe clearing out life’s unnecessary clutter.
Selling a larger home to buy a smaller less expensive home can provide you with needed cash. This cash can be saved or invested depending on your need.
Money savings will be realized with lower utility bills, lower home insurance premiums and possibly lower property taxes.
It may be extreme but a popular trend today is selling off your larger family home and moving into a “tiny home.” Named the Tiny House Movement, this is a description for an architectural and social movement for going back to living simply in small homes. These homes are 1,000 square feet or less.
Now this may be too extreme for you but reducing your home size by 50 percent may be a good move. Or a chance to change the area in which you live or move to another city.
The IRS provides a Tax Guide for Seniors (Publication 554) which it updates annually. Under the section Sale of Home it provides a description of how to qualify for an exclusion of up to $250K (single) or $500K (married) in capital gains tax. Your main home can be a house, houseboat, mobile home, cooperative apartment or condo and you need to meet the home ownership test.
I suggest you consult your tax advisor for more details or visit IRS.gov and search for the publication mentioned above. If you are an empty nester it might benefit you to downsize. I can send you a list of Fairfax homes for sale that meet the downsized criteria and have the amenities you may be looking for in a new neighborhood.