Big trend in downsizing
In Australia (particularly Western Australia) it is common to downsize from our large family home. In other countries this is not a trend, people tend to live in their home forever. I suggest this is partly because homes there are traditionally smaller, on smaller blocks or tend to be an apartment. Here we must deal with gardens, swimming pools and ongoing maintenance. The costs add up and it can be beneficial to live in a smaller property without a pool and easily manageable gardens.
It is important to decide on your lifestyle needs going forward. Do you need the capital that is tied up in your residence? Do you still have a mortgage to pay off and it would be beneficial to live mortgage free? Having less responsibility for gardens and maintenance will free up more time unless you love gardening and are good at DIY.
On the plus side – we all hope to realise extra cash in our bank account when we sell the family home. The federal government has also changed the law from 1st July 2022 to allow each partner, to make a tax-free contribution to their super fund of $300,000, from the sale of their main residence.
On the minus side – you will have costs involved in downsizing. The selling agent commission fee is normally between 2.2% and 2.5% of the sale price. There will be marketing costs involved for floor plans and launching on websites, signage, and brochures. The stamp duty applicable to your new purchase rises with the value of the property. You can check the amounts involved by using the WA government calculator https://www.wa.gov.au/service/financial-management/taxation-and-duty/calculate-your-transfer-duty.
You should consult your accountant or financial planner to decide what is the best way forward before downsizing. Make a plan of your needs and make an informed decision of all the costs involved. You may realise that it is better to stay where you are and modify the property.
At LE we have been selling executive homes for our select group of clients over the years. If you have any queries contact us at info@leasingelite.com.au or 08 9321 4228