Pick up a design magazine or scan the real estate section of the local newspaper and you’ll probably find something about downsizing. But the word means different things to different people. Downsizing often means moving into smaller, less expensive spaces, but some people are trading up and starting over.
However, according to the US Census, more than half of homeowners in the 55-to-64 age group are not buying new properties — luxury or otherwise. Some of them are staying where they are, but a growing number are selling their homes and moving into rentals like apartments in West Columbia, SC.
We have found a sharp swing toward moving to rental apartments compared to homeownership among the 55-plus population. During 2000, just over half (52.5 percent) of older recent movers moved to a rental. This proportion rose to 63 percent by 2013-14.
Regardless of whether they are looking to buy or to rent, downsizers are a highly visible group these days.
Whether downsizers sell and buy or sell and rent, there is one tax advantage, a “big one”.
US tax law generally allows an individual seller “to exclude from federal taxes the first $250,000 of gain on the sale of a primary residence ($500,000 for married couples filing jointly) that has been occupied for at least two of the five years preceding the sale”.
This can be a big windfall for people who are selling in anticipation of retirement. Also, the aforementioned rule applies to the house sale, no matter if a cheaper or more expensive home is acquired to replace the sold residence or if no replacement is made, e.g., the homeowner moves to a rental.
Either way, moving is a foreboding task, but you don’t have to go it alone.
Retirees can trade space for the lifestyle. Once you get to a certain point in your life, it becomes apparent what spaces — and stuff — you use and need, and then it’s time to ask yourself, “What do I do with the stuff?’ ”