Maybe you’re looking to relocate to a state you’ve always dreamed about living in. Or perhaps you just want to downsize to a more manageable property. Whatever the reason, the decision whether to buy or rent a home in retirement is a difficult one. A recent article in Consumer Reports Magazine offers some helpful advice on making this decision.
One of the most important factors to consider is how long you expect to live in your new home. Retirement does not necessarily mean you’ll never want (or need) to move again. The shorter you reside in the home, the less financially attractive purchasing it becomes. You will have less time to recoup closing and moving costs, and if you finance the home, you will have little equity in the new property when you sell it. In addition, the federal income tax reduction on mortgage interest may be less advantageous if you are retired and in a lower tax bracket.
In short, if you do not expect to remain in your new home for at least three or four years, you will likely be better off renting.
What is the right decision in your particular situation? You can access an extremely helpful ‘buy versus rent’ tool to help with this decision. Read the entire Consumer Reports’ article, by clicking here.