Moving into assisted living is a big step in someone’s life. It’s a difficult choice to make, but it has obvious benefits for seniors. When you make the choice to move into assisted living, deciding what to do with your home is often one of the major problems seniors face. Don’t worry, though — you have options. Educate yourself about the financial pros and cons of these options to make a confident, well-informed decision about what to do with your home.
Selling Your Home
If you’re leaving your home and have no plans to return, selling your home has many financial advantages. Selling your home will eliminate maintenance costs that come with owning a home, which will save you a lot of money. You will also immediately receive a large amount of money after you sell. This money can help with mortgage and assisted living expenses.
This large sum of money may tempt many homeowners, but it’s not a perfect solution. You only receive this money once, and because life expectancies are unpredictable, there’s a chance you will run out of money. In order to avoid this problem, it might be wise to buy a lifetime annuity.
Another issue that you could face if you sell your house is losing money on your house if it gains value over time. In many cases, people can’t wait a long time to sell their house if they need to move into assisted living, so this is a potential risk one must take if they wish to sell their house.
Before you think about putting your house on the market, it’s important to do some research on the market to see how much you could receive for it. For example, in Rockville, the average home sold for roughly $548,000 over the past 30 days.
Renting Your Home
If you have issues with what selling a home entails, perhaps renting is the better option. If you choose to rent out your house, you will receive a monthly income, which could pay for assisted living. This monthly income could potentially last for an unlimited amount of time, so you wouldn’t have to worry about running out of money. Renting your home also resolves the issue of losing money on your house if its value increases in the future, as you can raise the rent if the property’s value increases while the tenant lives there. Furthermore, because the house is still yours while you’re renting it out, you have the luxury of selling it when the market favors sellers.
But because the home is yours, you have more responsibilities, too. If you’re renting to a tenant, you must potentially deal with unpaid rent, redecorating costs, repairs, and replacing furniture. It also might be hard to take care of these potential issues if you’re in assisted living. Additionally, if you have a span where no one rents your home, you won’t receive any money. It might be in your best interest to hire a property manager to help keep your house in good repair, though keep in mind that this expense could run you between $250 and $300 per month.
Leaving Your Home to a Family Member
Neither of the previous options may be ideal for you, so consider leaving your house to a family member. You know you can trust the person, so it’s guaranteed that they will cover the maintenance and ownership costs, thereby saving you a lot of money. Be careful about leaving your home to a family member, though. You could be subject to a gift tax, which is applied to any property that is given to another person without receiving anything of equal value in return.
No situation is perfect when it comes to parting with your house as you transition into assisted living. Yet, it’s nice to know you have options. By having knowledge about ways to deal with your house and being aware of the profits and costs associated with these options, you can feel empowered to make a decision that works best for you.
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