As we age, our housing needs naturally evolve. In our earlier years, we often seek out larger homes to accommodate growing families, but as we get older, we tend to desire less space and may lack the energy to maintain a large home.

Additionally, aging may influence the type of home we want to live in.  As we prepare for the next phase of our lives, knowing when to buy or sell our current home can be challenging.

Prepare Emotionally

Preparing emotionally for a move is crucial. It can be difficult to let go of a home where you’ve raised children, made cherished memories, and formed close friendships in our neighborhoods.  There is no better place than Annapolis for all of those things!

When deciding whether it’s the right time to move, it’s always helpful to assess your emotional and practical needs for the home. Talking with family or close friends in the Anne Arundel County area who have been through a similar experience can provide invaluable insights.

Find Peace and Create Closure

Creating closure can help you move on from your current home. Taking pictures of family milestones and writing down memories can be a great starting point for moving on to the next chapter of life. Some people also write down the new adventures they’re looking forward to in their next home.

Downsizing

Downsizing to a smaller, more manageable property is a common step for many older adults. This could mean moving to a smaller condo or apartment, or even to a retirement community or assisted living facility. With fewer belongings to store, you may have increased freedom to travel and live in unique spaces. Additionally, downsizing can leave less for your loved ones to sort through later on.

Assisted Living

Sometimes living in an assisted living facility becomes necessary. For seniors living with memory impairment, memory care communities can provide a safe and specialized alternative. Managed by professionals trained to care for Alzheimer’s and dementia patients, these facilities are designed to accommodate older adults with progressive cognitive disorders. Caring.com offers a comprehensive resource for memory care facilities, including information to help caregivers and families in Annapolis, Maryland, better understand what memory care involves and how to choose the right community.

Investment Properties

Investing in Annapolis’ multi-family properties and rental units can also be a smart financial move during retirement. Owning this type of real estate can provide additional cash flow and passive income for empty nesters or retirees.

Equity: Your Roadmap

If you’ve lived in your home for years, you likely have significant home equity. Knowing how much cash you’re sitting on can help you make decisions about utilizing a reverse mortgage, or cashing out to create a nest egg for retirement.  The Wright Team offers complimentary home valuations, no strings attached. Contact us and we will be in touch to schedule a time to meet.

The Wright Team of Coldwell Banker Realty Can Guide You

Whether you decide to buy now or in the future The Wright Team of Coldwell Banker Realty is here to help guide you through the entire process. The Wright Team provides residential and commercial real estate services in Annapolis, as well as the surrounding communities in Anne Arundel County. With over 70 years of combined experience in the industry and superior local real estate, the Wright Team specializes in historic homes, new construction projects, marketing homes to sell, and assisting buyers to identify homes to purchase in the local area. Contact us today!

When most of us consider investing in Annapolis real estate, we envision cash flow, excellent returns on our investment when selling, and the many wonderful benefits of owning an income-producing property.  You’ll recall, however, that Uncle Sam always wants a fair share of our wealth-building strategies. And, owning real estate is how many Americans continue to create wealth for themselves.

Owning a home in Annapolis, beyond a primary residence however,  creates new tax challenges

Let us explain.

When you own just your home, and you choose to sell it before living in it for two years, capital gains taxes are likely to show up. But, with the average homeowner staying in their home for 5-7 years, this is rarely a problem.

When you start investing in and selling additional income properties, the government wants a piece of your earnings by way of capital gains taxes.

Enter the Tax Benefits of a 1031 Exchange

First, what is a 1031 Exchange?  A 1031 exchange occurs when you sell an investment property (a home other than your primary residence) in which you would generally have a taxable gain.

Instead of cashing out at the time of sale, you can sell using a 1031 exchange, a tax strategy that allows you to reinvest your profits into a similar (or “like-kind”) property and defer paying taxes on whatever you earn.

A 1031 Exchange is a great way to save and maximize your investment profits when investing in real estate and selling property in Annapolis.

What you should know about a 1031 Exchange

Equal Or Greater Value: As mentioned previously, to receive the full benefit of a 1031 exchange, your replacement property should be of equal or greater value.

Time Limits: You must identify a replacement property within 45 days of selling your investment and complete the exchange within 180 days. You can start your search for a home in Annapolis, right here on our site.

Work With Your CPA: The amount of capital gains taxes you pay are highly dependent on your income level and other financial factors. We recommend always speaking to your accountant or CPA to determine how these gains can impact your finances. If you don’t currently work with a CPA, here’s an article with 16 Tips to Finding the Right One.

Real Estate Investment Strategies

As real estate professionals in Annapolis, we recommend that our clients use a 1031 Exchange to forgo paying capital gains taxes when selling investment properties.

Doing so allows you to:

• Free up more of your profits
• Reinvest those funds into your future long-term retirement or other real estate investments.

There are rarely get-rich-quick schemes in wealth-building strategies so, we recommend that you focus on searching and investing in Annapolis properties that you can hang onto long-term that will generate the rent rates and cash flow you want.

The Wright Team of real estate professionals is familiar with the best neighborhoods and areas in Annapolis, and we know where rental properties are needed and which areas yield significant returns. We’ll also share the data you need to make wise investment decisions around cap rates.

The Bottom Line

A 1031 exchange is a lucrative strategy real estate investors enjoy to help them upgrade their properties over time and avoid dealing with renovations or costly repairs.

The Wright Team of Coldwell Banker Realty Can Guide You

Whether you decide to buy now or in the future The Wright Team of Coldwell Banker Realty is here to help guide you through the entire process. The Wright Team provides residential and commercial real estate services in Annapolis, as well as the surrounding communities in Anne Arundel County. With over 70 years of combined experience in the industry and superior local real estate, the Wright Team specializes in historic homes, new construction projects, marketing homes to sell, and assisting buyers to identify homes to purchase in the local area. Contact us today!

Are you planning to renovate your home in 2023? Check out our frequently asked questions to get started with your renovating!

How do I pick a contractor?

Ideally, you want to build the same kind of relationship with your contractor as you do with your real estate agent: one built on trust that makes you want to go back to that person for any future needs. Your contractor should be a very good listener and communicator. You want them to “get” your vision for your home, and to keep you in the loop every step of the way. Do your due diligence by checking out contractors’ reputations, talking with other clients, and looking at work they have done previously before you make your selection.

How much will my project cost?

Of course, the answer depends upon the scope of your project, but in order to get the best estimate from your contractor, take time to write down each detail of your plan so that the contractor can include everything in their estimate. Once you have a list in hand, visit a site like Fixr.com to get a rough estimate of what your plans may cost. Renovations are famous for taking longer and costing more than originally planned, but this is often because the homeowner makes additions or changes along the way, or they don’t realize that, for example, if you move a wall in your home, you may have to then reroute electricity and outlets. One item often leads to another, so you have to look at everything piece by piece.

How long will renovations take to complete?

As we said above, this depends on the amount of work being done– and how many changes are made along the way. The more pre-planning you do, the better estimate your contractor can give you.

How do I prioritize projects?

If you are living in your home during renovations, you may want to plan out the project in phases, so you can live out of some rooms while others are being worked in. You may also need to phase projects based on cost and availability of funds.

Where do I begin?

You begin by conducting a lot of research. Start a look book for your home, either in a notebook or online, collecting pictures of the look and finishes you want. Talk to different contractors, and visit kitchen, bathroom, appliance, and flooring showrooms to get ideas on selections and pricing.

Do I need permits?

Your contractor will know what projects require permitting. Make sure that you do abide by permitting regulations, as failure to secure proper permits can come back to bite you if further work is needed down the road.

How much will renovations increase my home value?

Every homeowner hopes that making improvements will increase their home’s value, and this is usually the case, but sometimes what homeowners view as improvement can turn out to be liabilities to future buyers. For example, don’t put so much money into the house that it becomes more expensive than the rest of the neighborhood. And be careful not to add personal style preferences that can’t be easily changed, like ornamental fixtures, radical architecture, or unusual landscape features.

How should I pay for renovations?

If you have the cash to pay for your renovations, that’s certainly a good way to go. Otherwise, you might consider a home equity loan with a manageable monthly payment or a revolving line of credit that you can use for renovations as well as emergencies that may arise later.

The Wright Team of Coldwell Banker Realty Can Guide You

Whether you decide to renovate now or in the future The Wright Team of Coldwell Banker Realty is here to help guide you through which renovations will make the make the biggest impact on your home’s overall value.  The Wright Team provides residential and commercial real estate services in Annapolis, as well as the surrounding communities in Anne Arundel County. With over 70 years of combined experience in the industry and superior local real estate, the Wright Team specializes in historic homes, new construction projects, marketing homes to sell, and assisting buyers to identify homes to purchase in the local area. Contact us today!