Is It Better to Buy or Rent a Home in Retirement? | SB Elder Law
Maybe you’re looking to relocate to a state you’ve always dreamed about living in. Or perhaps you just want to downsize to a more manageable property. Whatever the reason, the decision whether to buy or rent a home in retirement is a difficult one. An article in Consumer Reports Magazine offers some helpful advice on making this decision.
One of the most important factors to consider is how long you expect to live in your new home. Retirement does not necessarily mean you’ll never want (or need) to move again. The shorter you reside in the home, the less financially attractive purchasing it becomes. You will have less time to recoup closing and moving costs, and if you finance the home, you will have little equity in the new property when you sell it. In addition, the federal income tax reduction on mortgage interest may be less advantageous if you are retired and in a lower tax bracket.
In short, if you do not expect to remain in your new home for at least three or four years, you will likely be better off renting.
What is the right decision in your particular situation? By visiting http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0&abt=0002&abg=0 you can access an extremely helpful ‘buy versus rent’ tool. To read the entire Consumer Reports’ article, visit http://finance.yahoo.com/news/rent-buy-home-retirement-201500549.html.
Author Bio
Julianna Malis is the Founder and Managing Partner of Santa Barbara Estate Planning & Elder Law, a Santa Barbara estate planning law firm she founded in 2014. With more than 25 years of experience practicing law, she has dedicated her career to representing clients in a wide range of legal matters, including estate planning, elder law, Medicaid and Medicare planning, probate, and other estate planning areas.
Julianna received her Juris Doctor from the University of the Pacific — McGeorge School of Law and is a member of the California State Bar Association.
