In retirement, is it better to buy a condo or rent a place to live?

Retirement often brings a desire to simplify everyday life: less upkeep, a better-suited home, and more time to enjoy life. But should you buy a condo or rent? There is no universal answer. The best choice depends on your budget, your plans, and where you want to live.

Compare the total cost, not just the monthly payment

Buying a condo requires planning for the purchase price and, if applicable, mortgage payments. You also need to factor in transaction costs, including inspection and legal fees, as well as applicable transfer taxes, subject to any exemptions. Once you own, you'll need to budget for property taxes, insurance, condo fees, and the upkeep of your unit. Common fees notably contribute to the contingency fund, intended for major repairs to common areas.

Renting avoids tying up a significant sum for a purchase and generally spares you from directly paying property taxes and building upkeep. Your budget should still include rent, utilities not included, tenant insurance, and any moving-related costs. Renting can be appealing if you want to keep your savings available for other projects or expenses.

To fairly compare both options, build a multi-year budget. Include upfront costs, recurring expenses, and a buffer for the unexpected; don't just compare a mortgage payment to a rent payment.

How much freedom do you want for the years ahead?

A condo may suit you if you want to settle long-term in a neighbourhood and furnish a space to your taste. Renting generally offers more flexibility if you plan to move closer to family, change regions, or adapt your home to new needs.

In both cases, visit the home with your daily life in mind: step-free access, elevator, parking, transportation, shops, healthcare, and opportunities to see loved ones. Also ask about building life. A common room or activities can foster connections, but it's really the atmosphere and genuinely accessible services that will make the difference.

For a condo, check the health of the co-ownership

Low condo fees alone don't mean a condo is affordable. Before buying, ask to review the board's disclosure statement on the state of the co-ownership, the budget, financial statements, the maintenance logbook, and the contingency fund study. These documents will help you assess future expenses and the possibility of special assessments.

Taxes and estate planning: two questions to anticipate

If the condo is your principal residence and the applicable conditions are met, the principal residence exemption may reduce or eliminate taxable capital gains upon disposal. However, you shouldn't assume every sale will automatically be exempt. In retirement, also check credits related to services you might need: certain home-support tax credits for seniors may be available to both homeowners and eligible renters.

A condo is also an asset that must be accounted for when settling your estate. The liquidator will need to take inventory of assets and follow the wishes expressed in the will, if there is one. A notary and a tax advisor can help you review your family situation before making a real estate decision.

What does the current real estate market say?

The market varies greatly by region. Condo prices differ significantly from one area to another, and some markets show signs of rebalancing, though this doesn't mean all buyers have the same negotiating power. These general trends provide context, but it's the price of comparable condos in the neighbourhood you're interested in that should be compared against local rents to make an informed decision.

A simple method to decide

• Define your horizon: do you want to stay long-term in one place or keep the option to move?
• Prepare two complete budgets: buying and renting, with upfront costs, monthly expenses, and a reserve for the unexpected.
• Assess your available savings: how much do you want to keep for your projects, health, and peace of mind?
• Visit the neighbourhood as much as the home: check transportation, services, and opportunities to maintain a social life.
• If buying, review the co-ownership documents: pay close attention to the contingency fund and planned work.

The right choice is the one that supports your retirement without straining your budget or unnecessarily limiting your freedom. Torn between buying a condo and renting? Contact me for a personalized consultation. Together, we can clarify your priorities and explore the real estate options that match your next stage of life.