The trend of downsizing homes is majorly underway, and thousands of people across the country have already moved into smaller houses, or are considering it. Everyone who is looking to save some more money from their income can go for downsizing to reduce the living expenses and increase the savings. It just seems obvious that when you move into a smaller house, you will end up saving a lot of money.
However, if you haven’t done your research well, things might not go as planned. There are many things that you should consider before moving out and buying a new smaller house so that you can get the benefits of relocating. Many people move out of their luxurious large houses to smaller condos, but in the end, find out that they are spending as much or more than previously. It happens because there are many aspects that you need to consider starting from ad hoc factors like lifestyle, gas money, distance from work, to taxation and capital gains cost.
If you don’t consider these factors and others, you will end up saving a lot less than previously, and the entire idea of downsizing would seem like one big fail. Downsizing would only help when done in consultancy with the realtor and your CPA. It would help you know any hidden factors that you might have forgotten considering.
As they are experts in their respective niches and handle such affairs on a daily basis, they would be able to assess your old property and costs associated with maintaining it to the new property you are considering buying or shifting to and its costs. Here are the five hidden costs of downsizing your home and what you need to know before getting started –
Make sure that you consult with the professional tax consultant or CPA as well as your realtor. Fees of properties at different places can be different, and the amount of savings on other things might go on property taxes and other related taxes. If you haven’t taken this into account, you might be surprised at the end of the year when the new ‘small’ property gets you a ‘significant’ tax burden.
Maintenance and repair costs when moving out and moving into your new place as a measure of downsizing must be considered. The costs of repairing and maintaining smaller things around the new home may add up to be a substantial amount. It would lead to burning a hole deeper than you earlier thought.
When you are moving to your new house, make sure that you take a quote from different companies and see what the relocation cost is going to be. Disregarding this expense would fail your entire moving budget assessment. It saves a considerable amount of money, so make sure you do your research well to find the best quote for moving.
The moving company you hire can advise you on storage costs as well. As everyone got just so much stuff to store, it is essential that you know what the storage costs would be beforehand.
Cost of Living
The new home might be smaller, but the location can be great that can add to your lifestyle expenses. Moreover, the property taxes can be higher, and there might be other liens on the property too.
So, these are the hidden cost of downsizing your home you need to know. It is a good idea when executed well; else it would only add to your worries and empty your bank faster. Using multifamily leasing technology to assist with downsizing would greatly help in ensuring the downsizing happens seamlessly without errors.