How downsizing can transform your lifestyle and financial outlook
At Civium, one of the most common buyer demographics we work with are those who are looking to transition from their current residence into a smaller house, townhouse, or apartment. But what exactly are the benefits of making this move?
Lifestyle Benefits
The most significant advantage is often a change in lifestyle. Downsizing can lead to several lifestyle benefits, including:
- The ability to lock up and leave: With a smaller home, it becomes much easier to travel, as you won’t have to worry about extensive maintenance or security concerns while you are away.
- Reduced ongoing maintenance: A smaller property typically requires less upkeep, allowing you to spend more time enjoying life rather than managing a large home.
- Increased amenities: Many smaller homes or apartment complexes offer additional amenities, either within the complex or nearby, such as fitness centers, pools, or communal spaces.
Financial Flexibility
In terms of financial flexibility, downsizing often provides several economic benefits:
- Generally lower purchase versus sale cost: Smaller homes usually come with a lower price tag, which means you might have more leftover for other aspects of life.
- Debt reduction or mortgage payout: Downsizing can help you reduce or eliminate existing debt with a positive net figure likely post sale.
- Tax-free superannuation contributions: Government concessions allow for high tax free super contributions. See tips at the end of this article.
- Lower utility bills: A smaller home generally incurs lower utility costs, such as heating, cooling, and water expenses.
- Decreased upkeep costs: With less space to manage, you’ll likely experience a reduction in overall maintenance and repair costs.
Accessibility
Lastly, downsizing can improve accessibility:
- Better physical access: Many smaller homes, townhouses, or apartments offer better accessibility, often featuring fewer stairs or even single-level living.
- Closer proximity to essential services: Moving to a smaller home in a more central location can place you nearer to essential services, amenities, and public transportation.
Tips for taking the next step
If your considering downsizing, take a moment to consider:
- Work out where you want to go. What areas provide lifestyle options you want and proximity to amenities you need?
- Work out if you need to sell before you buy, or investigate other finance options.
- Get the right help from an agent. An agent can provide future home options, realistic values for your current property and a plan to action the move.
- Take advantage of the government concessions.
- In the ACT the government has introduced a pensioner duty concession scheme for established purchases.
- Off-the-plan concessions are available for purchases under $1,000,000.
- The tax office offers super contribution incentives where an individual can contribute up to $350,000 tax free into super from primary residence property sales.
