As you navigate the stages of your financial journey, the question of housing—your primary residence and beyond—will arise multiple times. Whether you’re contemplating upgrading to a larger home, downsizing as your children leave for college, purchasing a vacation property, or relocating closer to your family, these decisions are both significant and multifaceted. Here are some considerations for your next move.
Key Considerations
Lifestyle Preferences
Do you enjoy warm climates or prefer cooler temperatures? Are you drawn to the energy of a city, the tranquility of the suburbs, or the solitude of rural living? Your personal preferences will play a crucial role in determining the right location for your next home. Additionally, think about the type of amenities you require. Access to cutting-edge healthcare, proximity to cultural activities, and availability of outdoor recreation are all important factors to weigh.
Long-Term Vision
What are your long-term goals? Are you seeking to reduce home maintenance, lower housing costs, or move to a location you’ve always dreamed of? Perhaps you want to escape the extreme weather in your current location. Understanding what you hope to achieve by moving will help you make a decision that aligns with your overall life plan.
So What’s Your Next Move?
Moving to Be Near Your Children
Relocating to be closer to your children is a common motivation for moving, especially as they transition to adulthood. However, it’s essential to consider the broader implications of this decision. The cost of living, proximity to amenities, access to medical care, and the types of activities you enjoy are still vital considerations. Consider whether the size and location of your property are heavily influenced by family visits and how you would feel if those visits became less frequent over time. Would you be prepared to move again to downsize? Additionally, keep in mind that your children may relocate again in the future. Will you be comfortable with your chosen location if they move?
Downsizing for a New Chapter
If you’ve raised a family and are now empty nesters, you may find that the time, effort, and cost to maintain the family home isn’t worth it any longer. Downsizing can be an appealing option, particularly if your children helped with household chores that are now solely your responsibility. A smaller home, or one where maintenance is managed by others, may be more suitable for your current lifestyle.
Another reason for downsizing could be a shift in how you plan to spend your time. Many affluent individuals choose to split their time between multiple residences, such as wintering in Florida or Arizona and spending summers in New England or Michigan. In these cases, you may decide to have two smaller places. And each can be a little specialized. As an example, a couple recently explained that their Vermont home is designed and intended to be used from Thanksgiving to early spring. Their other home, in Maryland, no longer has things that are only used during winter – Christmas decorations, snow blowers, and even down comforters because they won’t be needed in that location. On the other hand, the Vermont home doesn’t have a grill, air conditioning, or a pool.
For others, downsizing or renting may be driven by a desire to travel more extensively. Perhaps renting a home or purchasing a smaller property that requires less upkeep while they explore the world makes better sense.
A Quick Note
We frequently come across situations where a homeowner is under the impression that they must roll any profit from the sale of their home into another home in order to avoid taxes on the profit. While this was the case years ago, today, a couple can potentially exclude up to $500,000 of gain from taxes on the sale of their residence, and they do not have to roll that gain into another piece of property.
Moving to a Lower Cost of Living
If you’re considering a move to reduce your cost of living, examine what makes the new location more affordable. Is it the climate that can impact heating and cooling costs? Lower taxes? The neighborhood? The amenities? Keep in mind that these factors can change. Tax laws may evolve, and neighborhoods can transform over time. Make sure you consider all aspects of the cost of living, including insurance rates, proximity to services, and even access to major airports if you travel frequently.
In conclusion, your housing decisions are about more than just the property itself. Your home and making the next move is about creating a lifestyle that supports your long-term goals, maintains your desired quality of life, and adapts to the evolving needs of your family. Taking the time to thoughtfully evaluate these factors will ensure that your next move is a step forward in your financial and personal journey.