Downsizing - A different retirement living option & tax savings for you to consider - RE/MAX nova

Retirement living options



"An aging population is getting some of the blame for projections that housing demand will slump in Halifax in 2015 and rebound only slightly in 2016.

The latest report from the Canada Mortgage and Housing Corporation (CMHC) released Thursday suggests demand for single family homes fell in 2014 and will be well below normal in 2015, though apartment construction, sales and rentals are on the upswing.

'We see the direct link between people exiting home ownership – empty nesters, single person households – and moving into an apartment,” said CMHC Atlantic Business Centre senior market analyst Guillaume Neault. “This explains partially why apartment units have been so popular.'" - Metro News 31/10/2014

I know that over the past 4 years ( 2010-2014 ), we have had many selling clients doing just that. Of course, when clients and friends who are at one end of the Baby Boomer spectrum are all following the same path, myself being at the other far end of the spectrum begins to wonder if this is the right option for myself & my wife in 10-15 years time.  So we started tossing around the pros & cons of the idea:

PROS of renting.

• No more maintenance
• In our Maritime climate, no more snow removal
• Invest the equity from the sale of our home so that it covers our monthly rent & hopefully a bit more.
• Freedom to come & go. If we want to travel, we just have to lock the door and go. If we decide we don't like our neighbors, highly unlikely but you never know, or the building itself, we can move easily enough.

CONS of renting

• Limitations as to landlord's rules and the tenancy act
• Rents can be increased
• Once you pay the money out for rent, it is gone. You are investing in the landlord's mortgage.
• What if the stock markets take a turn for the worse & your return on your investment  dwindles?
• Not being able to add your personal touches to your rental unit to make it feel like home.
• Most do not allow you to keep your beloved pet or will charge you a premium if you have a pet.

So what is the answer? I think I have come up with a good one, at least for my wife & I when we get to the age that our large lot becomes too much for us to look after and we are ready to downsize. This will not be an option for everyone but may me be the perfect balance for many of us aging Boomers.  Talk with your children.  Why not have your children purchase a condo unit in their names for you to rent from them. This way, you will have the comfort in knowing what your monthly payment will be: mortgage payment+property taxes+condo fees ( most now include utilities ).  Plus your children have the benefit of a real estate investment with built-in tenants who they know will take good care of the unit. The added benefit, and sorry if this seems a bit morbid to some, but when the time comes that you pass away, there will NOT be an inheritance tax charged on the sale of the condo unit. Of course, to avoid future arguments amongst your kids, I would recommend that a simple agreement be written up with a lawyer stating that the unit is not to be sold until you after your death, how the proceeds of the sale be divided, and a lease be drawn up.


As Realtors® we have to always have to "think outside the box" to come up with new ways that can best meet our clients needs & to better serve our clients better.  I know this idea is one that my wife & I have discussed with our son & daughter. And so far they are in agreement!
If you would like to further discuss your options for retirement living, feel free to drop me an email or give me a call.
http://www.MervEdinger.com