Now that you’ve decided to move into an assisted living facility, you have another major decision to make – what to do with your current house. Let’s look at what your options are and what you should consider when making the decision.
What are Your Options?
There are three main things downsizing seniors can do with the house they’re leaving. The first thing is transferring your ownership through a deed transfer. In most cases, you’d have to hire an attorney. The second option is turning the house into a rental property. Putting a house up for rent can be an extensive process. Aside from performing repairs, you’ll need to pre-screen tenants by performing credit and background checks as well as creating a comprehensive rental agreement. The last option is selling the house. While this can be less strenuous than maintaining a rental property, there’s still a lot involved in getting a house sold, according to The Balance. The steps include finding a real estate agent and a real estate attorney to handle their aspects of the sale. You’ll also need to accommodate open houses and home inspections. Alternatively, you can sell your house to your child.
The Potential Upside of Each Option
When you transfer ownership, you’d no longer be responsible for property maintenance or the mortgage, and the house stays in the family. A rental property creates a monthly income stream that you can save, invest or put towards your expenses. To make sure your rental property can bring in a profit, use the guide from Investimate that details how to determine your rental price and late fee. By selling, however, you’ll have a one-off lump sum instead of waiting for monthly payments. You also won’t need to worry about maintaining the house anymore. To make sure you get the most out of the sale, you should get the house ready by removing clutter and repairing areas that would impact the sale. You should also find out what your home is worth so you know whether or not selling it would reap a significant profit.
The Potential Downside of Each Option
According to Estate Plans Plus, there may be consequences to transferring ownership of your house to a child. These can include income tax issues if the child decides to sell the house while you’re still alive or issues with joint ownership if the child goes bankrupt. You can also lose Medicaid benefits related to long term care if you no longer own your house. Becoming a landlord also has potential problems as you’ll be responsible for a mortgage and the applicable property taxes. You’ll also have to perform scheduled and emergency repairs on the property. Since you’ll be in an assisted living facility, you’ll have to get a property manager. While this will mean that someone else will take care of responsibilities such as scheduling repairs and collecting rent, the fee will cut into the profits from the rent. While selling the house will free you from those obligations, you’ll also have to strictly budget the money from the sale.
Other General Considerations
Whichever you choose, it’s likely that you’ll need the services of an attorney, so make sure you have an idea of what different attorneys may cost ($100 to $200 in rural areas, for example). You should also know what it might cost you to carry out major repairs should you decide to rent or sell the house. This would likely still apply even if you’re selling the house to your child or relative. As you’re preparing to downsize it’s possible that you’ll have some personal items that can’t be stored with a relative and can’t go with you to the assisted living facility. In those cases, you’ll need to find a self-storage unit, which is another monthly cost to consider. The cost of these units will vary; for example, the cost of a 5×5 unit is $48.56 on average, but you can find a unit of the same size for as low as $45.
Deciding what to do with your house can be challenging. Make sure you consider all the details before moving forward with the best option for you. If there’s an immediate need to sell your house fast, then selling it for cash would be another option to consider. Call or Text us at (559) 578-3200 to know more.
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