Most people busy themselves with last-minute Christmas shopping and getting ready for New Year’s Eve parties right now. However, some are thinking about buying a new Westfield area home. These homebuyers include Baby Boomers (born between 1946 and 1964). Buying a home in your 60s or 70s may seem even more overwhelming than usual with retirement knocking on your door. If you are a senior home buyer, let me offer you a few tips to help make this transition a little easier.
Tips for the Senior Home Buyer
Put Future Needs at Top of List
Right now, navigating stairs and cleaning up a large home may still seem manageable. But down the road, you might find it much less so. The National Association of REALTORS® 2021 Home Buyers and Sellers Generational Trends Report found that Boomer buyers planned on staying in their homes for approximately 20 years. That puts them well into their elderly years. So, a smaller, single-story property may fit your future lifestyle better than a larger, multi-story home. You may even want to think about buying a condo or townhome instead of a single-family home to minimize maintenance tasks and expenses. Also, your priorities for how you spend your time may shift. Instead of worrying about commute times to work, you might want to live closer to your family (children, grandchildren, etc.).
Tax Repercussion of Selling Your Current Home
The NAR’s report also showed that Baby Boomers made up the largest group of home sellers last year. If you need to sell your current home in order to purchase a new one, you need to think about capital gains taxes. “Capital gains” is the profit you receive from the sale of your property (sold price minus purchase price equals capital gains). All home sellers who sell at a profit are subject to a capital gains tax. However, owners receive the first $250,000 (for single owners) or $500,000 (for married couples) of profit tax-free. You only pay taxes on any profit above that. For anyone who purchased a home 20 or 30 years ago, that could still mean a large tax bill when you sell it today. Therefore, keep this in mind, especially if you depend on the profits of your current home’s sale in order to purchase your next home.
It’s Still a Seller’s Market
Selling your Westfield home may come easily in today’s seller’s market. Unfortunately, finding another one might take a little time. So, you might want to start looking for your next home before you list your current one. At the very least, start that new home search as soon as your current home hits the market. But, as a backup, consider making temporary housing arrangements. This covers you in case there is a gap in time between the sale of your current home and the purchase of your next one.
Scott Gleason, CRS at Coldwell Banker Realty – East, NJ Luxury Homes