Most home owners dream of the day we can live mortgage free. The reality however, is not always as idyllic as it seems. Aged pension assets tests and low interest rates affecting superannuation mean that many Australian Seniors are living a frugal lifestyle, despite having no mortgage to pay. But what if you could release some capital and still live mortgage free?

Maintaining a large family home is costly and often becomes more of a burden than a pleasure. When the kids have grown up and gone, and there are just the two of you rattling around in a big house, unable to travel or treat yourselves to a day out because it’s too expensive, it’s time to rethink your lifestyle.

Legislative changes to aid in downsizing

Downsizing to a smaller, less expensive property can release capital tied up in your home. And changes to Australian tax law, which come into effect from 1 July this year, will make it even more attractive. Over 65s who sell their house will be able to contribute a lump sum of up to $300,000 into their superannuation. This contribution will be exempt from the current age and work tests for people in the over 65 age bracket. Couples can make this contribution into each of their funds, so that’s a total of $600,000 that can be invested without penalty.

Scaling down

Purchasing a less expensive home means you can live mortgage free and have a better standard of living. Not just financially either. Smaller homes, especially those in resort-style or over 50s communities, are relatively low-maintenance. These developments are designed around communal facilities like swimming pools and gardens all of which are maintained for you. Many over 50s villages have community centres, gymnasiums and club houses as well as a range of social activities. People find their social lives become fuller and more rewarding when they move into these sociable environments. What is more, there is the added bonus of onsite security offering you the ideal lock-up-and-go lifestyle. You can see the world and travel without worrying about leaving your home unattended for long periods of time.

Support

It can be difficult to leave the home you raised your family in. A lifetime of memories are held within the walls of your home, but don’t let living in the past prevent you from enjoying the present. And you don’t have to move far away to reap the benefits of downsizing. Research shows that 25% of seniors who relocate move less than 25 km from their old neighbourhood and half of those stay within 12 km.

Get support if you are considering moving to a smaller home. Speak to your family and friends about your plans. Research over 50s communities and retirement villages. Contact a reputable real estate agent for advice. There is lots help and advice available for people looking to downsize.

At Elanora Realty, we understand the complexities of moving in your senior years, we also understand the benefits downsizing to a smaller home can bring. For more information on downsizing, see our free seniors’ property guide or call us to discuss your requirements.