Ask an Advisor: Should I sell my home? I recently became a widow, and I’m not sure if I should sell my home and buy another home or rent. My home is filled with many memories, but it’s also a lot to take care of now.

Ask an Advisor: Should I sell my home? I recently became a widow, and I’m not sure if I should sell my home and buy another home or rent. My home is filled with many memories, but it’s also a lot to take care of now. – Anonymous

What an extremely challenging and emotional time. There are simply no great words after the death of a spouse, but I am here to help you think through what you should do with your home.

This way you can make an informed decision that feels best to you.

Before I get to the advantages and disadvantages of keeping the home, as well as the tax consequences of selling, let me say that there is no perfect timeline to make a decision.

Trust your instincts and take the time until you are ready to make a decision — not when friends, family, or acquaintances tell you that you are ready. In my experience, well-meaning people often give unsolicited advice to widows, and it’s up to you to do what is best for you.

Advantages of Keeping the Home

In my experience working with widows, there are usually two feelings about homes I hear most often: it’s filled with a lifetime of memories, or it’s filled with sadness from caregiving.

Advantage #1: You Keep the Physical Space with Memories

For many widows I’ve worked with, selling the home would mean getting rid of the space where they have happy memories together. It would be selling the home filled with birthdays, anniversaries, and other celebrations.

If you keep the home, you get to have a physical reminder of those memories. But, remember, the memories may follow you to another place.

What memories do you have of your home, and will those change if you are in a different space?

Advantage #2: You are Familiar with It

By keeping your home, you stay in a comfortable space. You may be more familiar with your home, the nuances, and what you can expect in needs in repairs. With a new home, there may be more uncertainty. You may already know how to turn off the water, how often the gutters need cleaning, and when other home maintenance tasks need to be done.

Having a familiar place can be really helpful when the rest of the world feels uncertain after loss.

Advantage #3: You Don’t Have to Move

Another advantage of keeping the home is that you don’t need to move, update your address, and add more to-dos to your already long to-do list. There is often a mountain of paperwork to complete after someone dies, and moving could make it more difficult.

Instead of spending time finding movers, packing, trying to decide what to keep of your loved one’s possessions, searching for a new home, and everything else involved in a move, you can focus on grieving, settling accounts, and taking time for yourself.

Advantage #4: You Can Decide to Move Later

People will often say not to make major decisions in the first year or two after the death of a spouse. Although it’s not necessary to wait, and there can be good reasons to sell within the first year or two, you can always decide to move later.

Some widows I’ve worked with felt really uncomfortable in the home initially, but later shared with me that they are glad they did not sell the home and waited because they would have missed their house and regretted selling it.

Disadvantages of Keeping the Home

While there are advantages to keeping the home, there are disadvantages you should consider, too.

Disadvantage #1: Your Capital Gain Exclusion Changes

There is a Section 121 exclusion that allows you to exclude $500,000 of the gain from selling a home if you are married and file a joint return or $250,000 if single.

The $500,000 exclusion is also available to widows for up to two years after the death of their spouse. (Note: It’s the date of death — not tax year — to qualify.)

This is important because if your home appreciated and you have a capital gain larger than $250,000, selling within the first two years may offer better tax consequences if you can take advantage of the $500,000 Section 121 exclusion.

If the home was jointly owned, it may receive either a partial or full step up in cost basis at death.

In Community Property states, homes often receive a full step-up in cost basis at death, which means if you bought a home for $200,000 20 years ago and it was worth $800,000 when your spouse died, your new cost basis may be $800,000 instead of $200,000.

Tip: Get an appraisal of the home. This way, if you decide to sell later, you have a method for establishing the new cost basis.

Taxes shouldn’t be the ultimate deciding factor, but it’s something to consider.

Disadvantage #2: Your Home Requires Upkeep

If this home has been in the family for a long time, it may be bigger than you need or want to take care of.

There are ways to make larger homes more manageable, such as hiring house cleaners, handy people, and landscaping companies, but it still requires time, money, and energy.

If your home is larger, it may be better to downsize to a smaller home or even rent if you like the idea of maintenance being taken care of and potentially a better location in a more walkable part of the area where you live.

If you sell, you may be able to reduce the amount you spend on your home each year, which could be used for family gifting, travel, or other spending.

Disadvantage #3: It May Not Be a Good Place to Age

Many people do not make a plan for aging, which is unfortunate.

Your home may have been purchased during a different season of life. It may not be the best place for this next season of life.

This may be a good time to make a change to a more manageable living space that is less to take care of and may serve you well for the foreseeable future.

That could mean a home with a separate space for a caregiver, an independent living community, or another setting with more activities and opportunities to be social.

Many widows say they feel lonely and isolated after losing their spouse. Is your home in an area where you can stay connected with others?

Evaluating Whether to Sell Your Home

Deciding whether to sell your home is often a very challenging decision, and even more challenging after your spouse passes away.

I encourage you to think through what it means to stay in your home, what it means to sell, and also to recognize how you feel today may not be how you feel in a year or five years.

Trust your gut as you decide what is best for you.

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Elliott Appel is a fee-only financial planner focused on widows and caregivers. Based in Madison, Wisconsin, Elliott serves clients locally and nationwide.

Get to know Elliott by visiting his website at kindnessfp.com.

Please note that Wealthtender earns a nominal monthly fee from Elliott in exchange for providing access to the benefits described here, subject to these terms. This compensation creates a natural conflict of interest when we favor promotion of Elliott and other financial advisors in the Wealthtender community over advisors not featured on our platform. Wealthtender is not a client of these advisors or firms.

This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

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