Downsizing your home for retirement

Press the play button to listen.

Transcript

Announcer: 96.5 we’re your family’s number one. Now I’ve got our lovely finance expert on the line, Helen Baker, hey Helen!

Helen: Hey, how are you doing?

Announcer: And tonight, I mean I sit there, I think, I’m only 35, don’t think I need to be thinking about retirement, but I sort of need to be thinking about it in the back of my mind. And you’ve got some tips, of how we can, if we own a house, how we can sort of plan ahead with the house and retirement, right?

Helen: Yeah, because what will happen, you’ll do different stages in life. So you’ll start off in the, you know, couple with little ones you don’t need a big house at that time because they are just running around in the home. When they get a bit older, and they’re teenagers, people tend to get a bigger house cause they need more space. And then of course the kids will leave home and move out and the parents are left with this big house. And they don’t really need this big house anymore. So it’s a great opportunity to fund your retirement by downsizing.

Selling down to something that’s a bit smaller and releasing that money for yourself as part of your retirement plan. Because the biggest benefit in investing in your own home is that it’s no tax. Whereas in an investment property, you pay capital gains tax if you sell it down the track. So the benefit here is you can build in an environment where there’s no future tax.

The trick is to be very disciplined, because what you often see is people downsize and they go for a smaller apartment for example but for the same value that they sold their house for. So sometimes they don’t actually get ahead. But the concept could work.

Announcer: Yeah. Well that does make a lot of sense. You get a bit older in life, and as you say, you bumble around in a big four bedroom house when there’s only the two of you or even one of you, so yeah, that’s a good idea.

Helen: Yeah.

Announcer: Perfect, alright, well thanks very much for joining us again this evening, Helen.

Helen: You’re very welcome, take care.

Announcer: We will catch up with her next week. If you would like to find out more it’s Helen Baker at OnYourOwnTwoFeet.com.au.