Six Months Here, Six Months There: One Couple’s Real Yearly Total
Vera thought of it as one home with a long holiday.
Picture a couple named Vera and Sid, 66 and 70. They keep their paid-off house, worth about US$500,000, and live in it for six months of each year. For the other six months they rent a one-bedroom apartment in a mid-priced retirement town abroad.
Vera thought of it as one home with a long holiday. Sid wanted to add up the whole year. He used the numbers they could get.
| A year for Vera and Sid | US$ per year |
|---|---|
| Property tax (0.9% of value) | 4,500 |
| Insurance | 3,000 |
| Repairs and upkeep (1% of value) | 5,000 |
| Utilities kept on, plus a security check | 2,400 |
| House subtotal | 14,900 |
| Rent abroad: 6 months at US$1,170 (illustration) | 7,020 |
| Cleaning fee on a short stay (an assumed US$100) | 100 |
| Total | about 22,000 |
Sid checked the sum: 14,900 plus 7,020 plus 100 is 22,020. That is about US$1,835 a month.
Vera looked at the house line and then at the rent line. "The house costs more than the apartment," she said.
"Twice as much," Sid said. US$14,900 is a little over twice US$7,020.
Then Sid remembered the insurance. Many policies have a clause about homes left empty for 30 to 60 days, and a vacant-home policy can cost about 50% to 60% more. On US$3,000 that adds US$1,500 to US$1,800. Their year moved to about US$23,500 to US$23,900 if they needed the extra cover. He phoned the insurer the next morning to ask what their policy said and what the extra cover would cost.
Then Sid noticed that the table showed only one way to live. The house is a home with three bedrooms, and the apartment is a one-bedroom. Keeping the house was one choice among several, and each choice has to give them a place to live all twelve months. So he built the other choices next to it.
If they sold, the US$500,000 would leave about US$470,000 after selling costs of 6%. At 4% a year that is about US$18,800. The assumption is a planning figure and not a promise. Then they would rent for the six months at home, and they would still pay the apartment abroad.
| Per year | Keep the house | Sell, rent a one-bedroom at home | Sell, rent a home like the house | Sell, live twelve months abroad |
|---|---|---|---|---|
| Income from the sale money | 0 | 18,800 | 18,800 | 18,800 |
| House costs | −14,900 | 0 | 0 | 0 |
| Rent at home, 6 months | 0 | −6,300 (US$900 plus US$150 utilities) | −19,200 (US$3,000 plus US$200 utilities) | 0 |
| Rent abroad | −7,120 (6 months plus cleaning) | −7,120 | −7,120 | −12,600 (US$900 plus US$150 utilities, 12 months) |
| Result | −22,020 | +5,380 | −7,520 | +6,200 |
Two of the columns put them in a home that is not the one they have now, so the comparison needs a note. A one-bedroom at home is smaller than the house. A home like the house is the right match for the home, and it leaves them US$14,500 a year ahead of keeping it (−7,520 against −22,020). The one-bedroom leaves them US$27,400 a year ahead, and the difference between the two sale columns, US$12,900 a year, is the price of three bedrooms and a garden.
The rent and the cleaning fee are illustrations, and prices vary by town. The table leaves out flights, the apartment's utilities for the six-month stay, and the deposit, which is usually one to two months of rent and is normally returned. It also keeps the full utilities line, although they use the house half the year. Taxes on the income and on any gain from the sale are left out of every column, and the sale column assumes that a gain is covered by the exclusion for a main home. Check that for your own case.
You could…
- Add your own house costs and your own rent abroad into one yearly total.
- Price a home like yours to rent at home, and a smaller one, for the same six months.
- Ask your insurer what changes when the house is empty for six months.
- Compare the total with renting abroad all twelve months, which at US$900 a month plus US$150 in utilities is US$12,600.
What does your own year look like when both homes are on one page? Describe your year in the comments. A reader adding up two homes for the first time could compare it with their own.
Figures are estimates for planning, based on public data.
Tell us in the comments