Whether you’ve already made the decision to move into assisted living or you’re currently weighing it as an option for your long-term care, there are probably many things running through your mind. One of the biggest might be what you’re supposed to do with your home when you move. Should you sell, rent, or leave it in the care of a family member?
Arriving at the Decision to Move
If you’ve not yet decided if assisted living is right for you, then it’s time to do some researching. Who is assisted living best for? The typical resident is someone who plans to live their lives in a calm and communal setting but needs assistance with activities of daily living. Oftentimes, declining health is a factor as well. Some may move from the hospital or rehab facility for a short-term outpatient recovery, but 76 percent move from their own home. Schedule tours, along with family and/or friends, to get an idea of the various settings and amenities. Cost is a factor in your decision as well, considering the median price in Arizona is around $45,000 annually, so don’t settle on the first one you see.
Selling Your Home
If you were the only one in your home and now you’ll be leaving it empty, the first thought is to sell it. The prices of assisted living were mentioned earlier, and even after combining all your financial resources (Social Security, Medicaid, retirement savings, etc.), you may still come up short. You can leverage the equity in your home via a home equity line of credit (HELOC) or a reverse mortgage, but you may see a benefit in selling your home, especially if it’s paid off. During your decision, consider the current value of the home, as well as the fact that it could decrease over time. However, repairs, updates, and renovations may also be required before you sell, so talk with a real estate agent and financial advisor to arrive at the best decision.
Renting Your Home
Renting your home can be a great source of income to help pay for assisted living, but this scenario works best if your mortgage is paid off. The rental income will need to cover your mortgage, home maintenance, and insurance while leaving you with enough left over to go toward the assisted living costs. Keep in mind that unexpected vacancies can cause issues and put a big stop on the cash flow. Ideally, you’ll have a family member or friend acting as the landlord on your behalf. Working with a property manager to prevent huge vacancies can help, but it’s expensive. However, real estate agents can help you find reputable long-term renters too, especially if you live in a competitive rental market like Phoenix. Remember, if you’re using Medicaid to help pay for assisted living, renting isn’t an option. If you don’t live in the home, it’s not considered an exempt asset, which impacts your eligibility.
Leave It to Family
If you’d prefer to keep the family home, especially if your assisted living stay is short-term or you’d just prefer not to sell, there are still options to consider. Unfortunately, the process is a little more in-depth if you want to avoid serious fees and tax consequences. You have a few options, and you’ll want to do some further reading to fully understand the benefits and implications of each. You could gift the property (and subsequently dip into your unified federal gift and estate tax exemption), sell the home for a bargain, or sell at full price with financing.
Moving out of the place you call home isn’t easy. Not only are you leaving, but you must figure out what to do with it. Whether you choose to sell, rent, or leave it in the hands of family, ensure it is the decision that best suits you so you can focus on settling into your new digs.
Source – Rhonda Underhill