Anybody upsizing their house in retirement without a mortgage?

[W2R]

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Originally Posted by imoldernu Yeah... that was not quite my house... no middle bedroom, so the master BR has double sized bath with big shower, and much bigger master BR, and a very large walkin closet. Very discerning of you to apply the architectural knowledge.

Now THAT would be perfect for me! But then, they say that houses have to have at least 3 bedrooms and 2 baths for resale. I am so picky. My present home has 3 bedrooms, but the middle one is only 9'x9' (very tiny). It's not much good for anything but an office, but hopefully will help for resale.

[brett]

We did the opposite. Downsized from a large home to a rental condo. We plan to buy. It was a good decision for us. We put the proceeds into the market and they far exceeded the growth of house prices in our area. Dumb luck.

I think it depends on your lifestyle or retirement plans. We live in the snow belt and plan to travel for 10-12 weeks during the winter. We will be travelling for 6-10 weeks during the late summer/fall. We like the ability to lock to door and go. After owning our own home for 35 years it is a nice change not to have that responsibility.

[Helen]

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I like the idea of selling enough to entirely buy the house in cash even before selling my present home, and I think that could be a great advantage in negotiations for the new home.

You raised a good point. Having the cash upfront made the seller more willing to negotiate. He had had two offers fall through prior to us making an offer. When told them it would be a cash deal.

Also, by selling after we bought, we could take our time moving in. We had all of the hardwood floors refinished and had a versalift installed in the garage. Versa Lift - Attic Storage Lifting System

Being able to move at our own pace took a lot of stress off us. I can not imagine trying to time the selling of a house with the purchase of a house.

[W2R]

Quote:

Originally Posted by brett We did the opposite. Downsized from a large home to a rental condo. We plan to buy. It was a good decision for us. We put the proceeds into the market and they far exceeded the growth of house prices in our area. Dumb luck. I think it depends on your lifestyle or retirement plans. We live in the snow belt and plan to travel for 10-12 weeks during the winter. We will be travelling for 6-10 weeks during the late summer/fall. We like the ability to lock to door and go. After owning our own home for 35 years it is a nice change not to have that responsibility.

That is another possibility I am considering, though. I'd love to have the "lock and leave" capability, and even more I'd love not having to maintain a yard that I never ever use. By renting the condo, you do have to deal with a landlord and possible increases in rent periodically, although not with an HOA.

Overall, home ownership has a big emotional draw for me, though. Like some other women, I just feel a need for my own living space that I can stay in forever and that is mine. It's probably remnants of some sort of nesting instinct. So, I'd have to work on the emotional aspect of going back to renting.

Quote:

Originally Posted by Helen You raised a good point. Having the cash upfront made the seller more willing to negotiate. He had had two offers fall through prior to us making an offer. When told them it would be a cash deal. Also, by selling after we bought, we could take our time moving in. We had all of the hardwood floors refinished and had a versalift installed in the garage. Versa Lift - Attic Storage Lifting System Being able to move at our own pace took a lot of stress off us. I can not imagine trying to time the selling of a house with the purchase of a house.

I know myself well enough at this point to be pretty sure that I will want to do renovations before moving in, like you did. If my present home sells fast, I can always rent while I am finding the new home (which could take a year or more, because I am so picky), and while the renovations are being done. Or, if it takes longer to sell I could handle it the way you did.

I love the idea of being able to move at my own pace! Sounds delightful. Also that would take much of the stress off the closing process because a delay of a day or two wouldn't mean having to move twice.

[LoneAspen]

Even though I'm single, never married and no kids, I rent a 3000 sq ft house in a subdivision, and I like having the extra space.

The lot isn't that big (typical Silicon Valley housing subdivision), but I feel all the extra space in the house gives me enough room for my hobbies. It's technically a 4 BR + office, and I use the Master to sleep in, the office as an office, and converted one of the 12 x 12 bedrooms into a "real" home theater (112" screen, front projector, painted ceiling black, acoustic treatment on walls...the works). The other two bedrooms I use to store all my camping gear, and other hobby-related things.

As crazy as it sounds, 3000 sq ft works out well for me.

Shared walls like an apartment, condo, or townhouse weren't an option for me. I HATE living next to, above, or under, other people because I can't deal with their noise. TVs, stereos, kids, musical instruments, barking dogs, etc...I can't deal with it. So SFH was the only choice for me.

When I eventually leave the Valley and move back to Colorado, I'm looking for probably another 3000 sq ft home up in the mountains on at least a couple acres. Thinking Evergreen or Genesee area, west of Denver. I love that area, and there are some nice homes there.

I'd like to think someday I could reduce my footprint, but I doubt I'd be happy. One of the houses I've owned in the past was a small 1500 sq ft and I didn't like it - the bedrooms were too small, and there wasn't enough useful space in it for me. I felt cramped.

About 3000 sq ft works well for me. Any more $$$ put into the home, I'd probably dump it into more acreage than space inside.

[aja8888]

Quote:

Originally Posted by Helen ..........and had a versalift installed in the garage. Versa Lift - Attic Storage Lifting System

Love that Versalift!

[Helen]

Quote:

Originally Posted by aja8888 Love that Versalift!

It really helped us to be able to use the attic as storage space. The stairs to the attic are a drop down ladder so there are no railings and it is a fairly steep pitch. We would have had to use the finished basement for storage. So, we gained a lot of living space by buying the versa lift.

It took a bit of googling to find it. I knew what I wanted but I didn't know if anyone made one or what it was called. I think the guy we hired to install it bought one for himself.

[spncity]

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Originally Posted by imoldernu We're pretty happy with our floor plan

We had a walk-in pantry once in a house we rented for a year. Great invention.

Kindest regards.

[Options]

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Originally Posted by explanade I could sell for a big profit. However, I don't think it would necessarily buy a bigger home because of how much prices have gone up. Plus, my property tax assessment would be much bigger, so I'd probably have to pay several times what I'm paying now. Moving away from the Bay Area or out of California would allow me to get a bigger home and probably have money left over. Once FIRE'd, there is really little to keep me in the area, though the weather and amenities are nice. I'd imagine a bigger home in say Arizona would be cheaper, have lower taxes but probably bigger electrical costs for the AC.

+1 on all counts mostly. Huge equity from selling this place in LA will allow me to actually buy something larger for much, much less and with lower prop taxes in a lower cost area. I grew up in the Bay Area and like SoCal now, I despise it. Once I leave here in a couple years, I won't return (just like I've never returned to the BA other than painful trips to visit family up there who don't have the sense to leave).

[Amethyst]

If your landlord has to deal with the HOA, his/her tenants will, by extension. Example: We had tenants who made alterations to the property (window a/c, security bars in windows) without asking us or checking with the HOA. We actually would not have minded these changes. However, the HOA went after us to make the tenants take down the alterations.

Amethyst

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Originally Posted by W2R . By renting the condo, you do have to deal with a landlord and possible increases in rent periodically, although not with an HOA. .

[explanade]

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Originally Posted by Accidental Retiree Currently we are looking in Riverside/North San Diego Co., where we lived 30 years ago, as our Prop 13 tax base will also transfer to those counties. (Property taxes will still about double, if we move, due to all the special assessments that have been added to meet local needs.)

Are you referring to Prop 90, about transferring your property tax base?

So if your old home is assessed at $400k by the county you live in, you can buy say a $800k home in another county and that new county would use $400k as your property tax base?

Seems like it would be a good idea to get that confirmed before buying the new home.

My understanding is that for a one-time exemption, within the same county, the new home can't be worth (maybe market value, which could be more than the assessed value for property taxes) more than the old home.

[Midpack]

Quote:

Originally Posted by imoldernu Yeah... that was not quite my house... no middle bedroom, so the master BR has double sized bath with big shower, and much bigger master BR, and a very large walkin closet. Very discerning of you to apply the architectural knowledge.

Looks like an Epcon, we looked at them.

[Accidental Retiree]

Yes, I am referring to Prop 90. The houses we are looking at are listed at a lower price than what our house would sell for, according to our potential listing agent, so it seems we fall into the right slot. I will definitely check with the county assessors' offices of both counties before doing anything.

Here's a link to the site:

Exclusions from Reappraisal - Frequently Asked Questions- Board of Equalization

Prop 90 applies to inter-country transfers; Prop 60 to intra-county transfers.

Quote:

Originally Posted by explanade So if your old home is assessed at $400k by the county you live in, you can buy say a $800k home in another county and that new county would use $400k as your property tax base? Seems like it would be a good idea to get that confirmed before buying the new home. My understanding is that for a one-time exemption, within the same county, the new home can't be worth (maybe market value, which could be more than the assessed value for property taxes) more than the old home.

[daylatedollarshort]

I think you just have to pick a house size that fits your lifestyle. The house we have now has been good when the kids were at home and they'd have friends over. It was like that again some days over the holidays this past year.

But for just the two of us going forward once the kids are launched we want a lock and go place next. Maybe I'll feel differently some day, but I am not much of a housekeeper, decorator or a gardener so a big place just seems like a lot of work these days.

My dream is to have a relatively small space with modular furniture and a small patio, which is about all the gardening skills I am qualified to handle. I would like to get furniture like this:

Space-saving furniture that transforms 1 room into 2 or 3 - videos - *faircompanies

I could see living some place bigger if we planned to be home more to enjoy it.

[W2R]

Quote:

Originally Posted by daylatedollarshort My dream is to have a relatively small space with modular furniture and a small patio, which is about all the gardening skills I am qualified to handle. I would like to get furniture like this: Space-saving furniture that transforms 1 room into 2 or 3 - videos - *faircompanies I could see living some place bigger if we planned to be home more to enjoy it.

That does sound nice! I am all in favor of a low maintenance home. I enjoyed the video at your link, thanks.

[keegs]

We've lived in this house for almost 30 years. It was about 1000sq ft originally and after a few years I (DW was ok with it) started getting cabin fever. We were going to upsize to a newer house but we liked the neighbors and eventually decided to add a level and finish the walk out basement. The house is about 2000 sq ft now and much more comfortable for me.

We bought a second home some time back primarily with proceeds from shares my wife had purchased over time through her employer. As I recall it, the share price at purchase had fluctuated and there was a split in there at one time, so there were cap gains costs to deal with but overall nothing like what we would have paid had we taken a mortgage.

There's equity in both properties now.

[W2R]

To conclude this thread and "wrap it up with a bow", here's what I decided was the right thing to do based on my own inclinations that were consistent with many of the great comments above. I decided to go with an approach nicely described by Midpack's suggestion, back in post #2, and withdrew $50K from my portfolio to establish my "house fund". Since I have a few years to accumulate what I need, hopefully if I do this each year my tax situation will remain manageable.

Thanks so much to everyone for your very helpful comments and contributions to this thread, which were even more expert and illuminating than I had hoped.

Carry on if you wish, or not....

[oldphd]

Edited to add: Looks like I cross posted with you…

W2R, a thought back along the lines of the financial side of things…

If you're unsure about the timing, you could go ahead and execute a trade that would realize LTCG and then repurchase, which would reset the basis. The federal tax rate would be 0% up to the 15% bracket, or 15% after, depending on your situation. Obviously it depends on what your other income desires are, for example if you are doing Roth Conversions. This would allow the money to continue working in the same investment, and then a year or two down the road if you decide to make a purchase, you could get your hands on more cash without incurring all the taxes in one year due to the increased basis. But if you don't end up buying the house, you still have the money invested in the same way as you did originally.

Personally, I am also thinking about upsizing in retirement, at least $$$ wise. Very similar thoughts, we would like amenities that we don't have now, likely in a different location. I don't know when this will be, perhaps a few more years, but not sure. I've been doing a combination of sales and Roth conversions up to the 15% bracket. The LTCG sales are done for this reason, keep more readily available cash in the event that I decide to make a purchase, and wouldn't want to incur LOTS of gains in one year. I also want to balance between Roth conversions and LTCG in case tax law changes would make one or the other more beneficial. Just like diversifying investments, I want to be balanced between the two instead of putting all my eggs in one basket. And with current projections, I may be unable to stay in the 15% bracket once I get to RMDs, so the LTCG owe money to the IRS. Good problem to have, though!

[W2R]

Quote:

Originally Posted by oldphd Edited to add: Looks like I cross posted with you…

No problem! Your post is very helpful and provides much food for thought, so thanks.

[Lsbcal]

Quote:

Originally Posted by W2R To conclude this thread and "wrap it up with a bow", here's what I decided was the right thing to do based on my own inclinations that were consistent with many of the great comments above. I decided to go with an approach nicely described by Midpack's suggestion, back in post #2, and withdrew $50K from my portfolio to establish my "house fund". Since I have a few years to accumulate what I need, hopefully if I do this each year my tax situation will remain manageable. Thanks so much to everyone for your very helpful comments and contributions to this thread, which were even more expert and illuminating than I had hoped. Carry on if you wish, or not....

Wait W2R, I didn't get my 2 cents in yet! Just kidding.

But I am wondering why you decided not to move to that nice town you and Frank were thinking about before you retired (somewhere a bit north if my memory is right)?

If you are unhappy with how your neighborhood is going, why just make an incremental change when you could move to an ideal location?