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3 Questions to Ask Before You Downsize

3 Questions to Ask Before You Downsize

by | Sep 9, 2020 | Finances

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Homeowners may choose to downsize for a variety of reasons. Maybe you’re tired of maintaining an older home, maybe you don’t need as much space anymore, or maybe you’re just ready for a changeNo matter the motivation, this is a big decision with many financial details involved. 

Have you been thinking about simplifying and wondering if downsizing is the answer? Here are three questions to consider. 

  1. How much would downsizing cost?

If you own your home, you’ll pay a real estate agent’s commission to sell. And before moving, you’ll probably need to resolve deferred maintenance, do a deep cleaning, and spruce everything up. This might involve painting, landscaping and staging. 

The move itself will cost money, and if you’re buying a smaller place, you may pay mortgage closing costs. You’ll probably also spend money to personalize your new home with new furniture and decor. 

  1. What would it cost to stay?

The time and money you’ll spend to maintain your current place will add up over the years. Figure out your estimated costs. How do they compare to the costs of the new place you’re considering? 

  1. What’s the tax impact of downsizing?

Federal capital gains tax applies to a profit of more than $250,000 (single filers) or $500,000 (married joint filers) above your home’s cost basis when you sell. Also, consider property taxes: Will they be higher or lower after you move?

These are just a few of the details to think about when it comes to managing and planning for your long-term comfort and stability. 

Do you have any questions we can help with? Reach out anytime.

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What to Know About New Retirement Rules

What to Know About New Retirement Rules

by | Jul 26, 2020 | Retirement, Taxes

 llAct Act Act upAre you familiar with the new provisions about retirement accounts from the SECURE Act and coronavirus relief bill? These changes may affect how you make retirement decisions in the coming weeks and months.

These new rules don’t apply to everyone and it’s important to reach out to discuss your situation before making big changes. But if you need a quick recap of a few key details, please review the following:

401(k) Distributions

  • Per the Coronavirus Aid, Relief and Economic Security (CARES) Act, qualified participants younger than 59 1/2 won’t pay the usual 10% penalty on up to $100,000 in early distributions from their 401(k) in 2020
  •  You’ll still owe income tax on your distributions but you can spread the payments over the next three years.
  • If you take an early distribution due to the coronavirus and redeposit all or part of the total amount within three years the repayment amount each year won’t count toward your annual contribution limit for that year.

Required Minimum Distributions From Retirement Accounts

  • The coronavirus relief bill waves RMDs in 2020.
  • It’s also important to note that the SECURE Act, which was signed into law in late 2019, and its update SECURE Act 2.0 passed in 2022,  include a number of provisions related to retirement. Notably, these laws push back the age for taking required minimum distributions from 70 1/2 to 72.

Do you have questions about the tax implications on retirement or need assistance?  Please, reach out if you like to go over anything in more detail.

 

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