We all dream of owning our very own apartment or house by the time we retire. However, the benefits of renting a house in retirement are also considerable. As for owning a house, you can stay relaxed without needing to think about monthly rent or the homeowner increasing the rent. On the other hand, by renting a house you can save money as you will not need to spend for fixing and preservation of the house.
Any way you choose, there will be some cost for the house in your retirement. Paradise Developments provides an informative article about renting vs. buying. You can check it for more specific information if you are living in Toronto.
Here, we will discuss some important aspects that you should think about while choosing between buying and renting.
Important Factors to Make the Decision
· Tax Implications: For determining what should be the choice, the first thing that you need to do is to acknowledge the tax implications. The taxpayers mean the homeowners can save money from the property tax deductions that are almost twice from the previous amount. Also, fewer people are expected to make a profit out of this. The renters can not save money from this as the expenses for renting are not tax-deductible.
· Risks to Consider: Usually, in retirement, purchasing a home provides you more value of the money than the rental. But, it also features some substantial risks that you have to always be prepared for. The risks can be unpredictable maintenance costs, insurance costs, etc. Also, prepared for inflation as it can affect both decisions.
· Investment Opportunity: A house can be an investment opportunity, but it should not be bought for that basis entirely. For using a house for investment, you need to purchase a low-priced house and then sell them at a high price. However, if the market cost becomes more than what you got from selling, then you will have to again go for renting. You can also invest by renting a house and then wait for the cost of the house to become less, and then purchase it.
· Cashing out and Liquidity: If you are a tenant, then you do not have to think about the market demand and liquidity of housing. To sell a house, you have to deal with a lot of paperwork and real estate agencies that also take money. You can avoid these during moving if you are a tenant. Also, after retirement, people usually live with pension money. They do not possess money for abrupt expenditure all the time. So, if you do not have other money earning work or assets, then buying a home can be a big problem for you.
Advantages of Renting a Home
Renting a house has its benefits. If you are a tenant then you already know them. However, if you are a householder and want to sell the house to move into a rental, then here are some advantages of renting a house that may benefit you.
1. Available Alternatives
If you are a person who moves around a lot and does not like to stay in one place for a long time, then renting is the best option for you. As you can move away anytime you wish. You can go to a place with better weather or less rent, or you can even live near your family in the future. You can take a long-term lease to prevent the chance of increasing rents.
2. Less Expense
Reports suggest that buying a house is more costly in nearly all cities with people aged 65 or more. You should evaluate the costs involved in renting and buying a house in the area you wish to stay.
3. Less Maintenance
If you are a tenant, you should not have to expend for structural maintenance. Maintenance needs increase with the age of the home and the homeowners have to pay for all the maintenance costs. Always check the terms and conditions carefully before renting, and ensure that the homeowner is accountable for the repair and fixing of the house.
· Little maintenance cost and responsibility
· Flexibility for moving house
· Fewer expenses, taxes
· Surprising rent increment, eviction
· No tax profits
· Can’t customize the house
Advantages of Buying a Home
Buying a house is more expensive, but there are also some benefits. If you don’t have any reason to move from one place to another place frequently and wish to be the owner of your own house, then here are some advantages of buying a home that will help you to make the decision.
If you are the owner, then you will have full control of your house and feel stable. You will not need to stress about paying rent, nor can anyone move you out of the house unexpectedly. You can move with your own choice.
2. Build Equity
As the property value grows, so does your home equity. Therefore, owning the house provides you with an asset that has worth. Also, the rent increment can be evaded.
3. Tax Profits
As we said above, the tax charges reduce the chance of subtracting the interest and tax of property. Also, some other allowances lessen the payment you owe. You will not have these profits if you rent the house.
· Tax deductions
· Maintenance expenses and time
· Long term obligation
· Property taxes
People who have retired or are retiring soon have to make the difficult choice of whether they wish to live in their own house or someone else’s house and paying rent. There are some advantages in both choices and also there are various costs associated with both. So, choose the option that is more beneficial for you.