When you decide to downsize, you automatically assume you will end up with a big chunk of money in your pocket .... but that is not always the case. While you may downsize your space, you may want more luxury in the small space or a better neighbourhood. In general, the price per square foot of smaller homes can be more than larger homes so you may pay more for less living space. You may also need to downsize your furniture so you must factor in the cost of new furniture.
My experience is that in the end, many people swap dollar for dollar on the purchase ..... but the benefit lies in lower mortgage costs, property taxes, utility bills, upkeep and general maintenance expenses ... and a simpler lifestyle.
You will need to factor in the cost of making your move. These costs can include:
1. Fix-ups required to make your home ready to sell.
2. Sales fees to sell your home.
3. Land Transfer taxes on your purchase.
4. Legal fees, mortgage discharge fees.
5. If you buy before you sell, financing and cost to carry 2 properties.
6. Movers and moving expenses.
7. Expenses involved in selling or giving away items you don't need.
8. Cost of buying new furniture.
Make sure you also consult your tax advisor to find out about any tax consequences of the move.
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