Downsizing is not automatically a financial win. Selling costs, replacement-home cost, moving expenses, rent inflation, maintenance and the investment return on released equity all need to be modeled together.
Three housing strategies to compare
| Strategy | Main financial effect |
|---|---|
| Keep current home | Preserves home equity and current housing pattern; ongoing ownership costs continue. |
| Downsize | Sells the current home, buys a lower-cost replacement and invests remaining net proceeds after transaction/moving costs. |
| Sell and rent | Releases more home equity for investment but introduces ongoing rent and rent inflation. |
Costs that are easy to underestimate
- real-estate commissions and legal/closing costs;
- land transfer tax or other purchase costs on a replacement property;
- moving and furnishing costs;
- condominium fees or maintenance on the new home;
- rent increases if selling to rent;
- the opportunity cost of home equity versus invested assets.
Principal-residence tax treatment
The sale of a qualifying principal residence can often be sheltered by the principal residence exemption, but tax treatment depends on the facts and reporting requirements. The retirement planner treats the home as a principal residence for its simplified housing scenarios and does not replace professional tax advice for unusual ownership situations.
How the housing planner compares strategies
The tool can model current home value, mortgage, appreciation and annual housing costs, then compare keeping the home, downsizing at a selected age or selling and renting. Released net equity is added to retirement assets and alternative housing costs are carried through the projection.
Compare your housing options
Enter your home, mortgage and housing costs and compare keep, downsize and rent scenarios.