Recent statistics from popular estate agents indicate that as many as 55,000 homeowners are downsizing every year. As such it does not surprise that people are in the “sell my house fast” mindset in this market.
Given the cost of maintaining a property nowadays, downsizing does offer more money freed up from tax and estate costs which can then be reinvested elsewhere. But there are a few things you should consider before downsizing your property.
Can You Live Without the Memories?
To most homeowners, a house is more than just another building. It’s where they get married into, where they see their family grow up and in time, where they want to retire. That means a lot of memories within the boundary of those four walls.
Often when people are downsizing, leaving the room where their first-born slept or the couch where they watched the weekend games, turns out to be too stressful. As a result, it’s best that you judge for yourself if you’ll be able to do without these sentiments.
Did You Consider the Tax?
Now, people often get excited when downsizing and would be all like “sell my house fast”, but do you know that you need to pay tax on the sales amount. Every time a house is sold, the seller needs to pay capital gains tax to the government as a percentage of the total sale value.
In most cases, it’s between 20%-30% depending on the laws and regulations. That means, your receivable amount just got cut by 20%-30%.
Downsizing a Property Means Downsizing Your Belongings as Well
People often fail to realise that when you downsize your property, your belongings need to be downsized as well. So, no more closet full of shoes or a big bag full of exotic liquor. In such a case, it’s best to first start taking an inventory of all your belongings.
Next, tick out that stuff that hasn’t been used in the past six months. This will eradicate all the stuff bought as impulse buys and you don’t necessarily need. Fishing gear, gym equipment, extra dresses will normally fall in this category.
Once that’s done, recategorize the items left into must-haves and good-to-haves. While the must-haves are your necessities, good-to-haves are more luxury and convenience items. An important note to remember is to limit duplicates. Having the same set of silverware or same toe-cut shoes do not make sense.
Can You Live in a Lesser Space?
While living in a particular space, it is normal for people to be accustomed to their surroundings. Downsizing will mean that you will not have the same amount of space required to entertain your guests or you might have to shift your dining table into the kitchen. Lesser spaces also mean that you have less privacy for yourselves.
These points are not as apparent until people start living in the new space. Ideally, preparing yourself mentally helps to anticipate the challenges that come with a smaller property. So, if you’re thinking of downsizing as well, contemplate on this points and rethink that “sell my house fast” philosophy.