The recent downturn in the economy has brought this topic up more frequently than ever. Seniors have unique circumstances that need to be considered. These circumstances much different than when we were younger, searching out for our âstarterâ home.
Those in active adult communities have a number of amenities and options, which give us some fabulous benefits whether we own or rent. Many of our Sun City neighbors have chosen to remain in the community but downsize from their single-family, free-standing home to a smaller club home or condo. Some have chosen to rent vs. own.
In general, if you own your home free and clear, itâs probably cheaper to stay there than to rent. If you have a large mortgage, renting may be cheaper than continuing to own. If youâre planning to sell a home thatâs too large or impractical, youâll need to weigh renting versus owning, both the financial and the emotional aspects.
From a financial standpoint, the cost of carrying a mortgage may have tax benefits for the interest paid on the debt, but only if you itemize tax deductions on your tax return. Many seniors do not itemize deductions on their tax returns; therefore, there is no tax benefit in carrying the debt. Other costs of ownership such as property taxes, insurance, and maintenance of the property when added to the mortgage costs can exceed the costs of a comparable rental property.
As seniors, the maintenance costs of owning the home can become more substantial. The fun of mowing the lawn, pruning the bushes, and shoveling the snow when we were younger becomes an added cost when we canât do it ourselves and have to contract with others to get it done. What used to be minor repairs and upkeep when we did it for ourselves turns into an added repair cost when we bring in electricians, plumbers, and painters.
Emotionally, many of us have owned our homes for years. We take for granted that we wonât have to rent again. The pride of ownership and the state of independence have been a part of us for many years. However, as our circumstances change due to loss of a loved one or perhaps a need for temporary assisted living, the pride of ownership can quickly turn to a burden of responsibility.
If you consider renting and plan to be in that same location for a number of years, its best to lock in the rental rate for as long as you can or agree to upper limits on the amount of increases. You will also need to get renters insurance to protect your personal property. The cost of utilities and association fees are typically borne by the renter.
⢠Send your questions and ideas to: Sun Day, Frugal Forum Column, P.O. Box 7505, Algonquin, IL 60102, or, by email to: thefrugalforum@gmail.com
