Downscaling, or moving into a retirement village

This is usually the hardest sale a person makes. It is rarely only about money — the house holds forty years of a family in it. What I can do is make sure the practical side is clear, because that is the part that causes the sleepless nights.

Life right, sectional title, or share block

Retirement schemes in South Africa come in three forms, and the difference matters enormously to what your family inherits. This is the single decision people understand least.

None of this makes life rights a bad choice. For many people the lower entry price, the frail care on site and the certainty are exactly right. It just needs to be a decision you made rather than one you discovered afterwards.

You probably will not pay capital gains tax

This is the fear I hear most, and it is usually unfounded. The first R2 000 000 of gain on a primary residence is excluded, and the gain is what you sold for less what you paid and what you spent improving it — not the sale price.

A house bought for R450 000 in 1994 and sold for R2 600 000 has a gain of roughly R2 150 000 before costs. After the primary residence exclusion, the annual exclusion and the agent's commission coming off the proceeds, most people in that position owe nothing at all. Run your own numbers rather than assume.

Sequencing: the part that actually goes wrong

Selling and buying at the same time is the real difficulty. Three ways people handle it:

1. Sell first, then buy. Strongest negotiating position on the purchase, because you are not conditional on anything. The risk is being between homes, so agree a longer occupation period with your buyer or arrange somewhere to stay.
2. Buy first, then sell. Comfortable, but you carry two sets of rates and levies, and you will be tempted to accept a weak offer on the family home because you are exposed.
3. Make the purchase conditional on your sale. Common and workable, but it makes your offer weaker against a buyer who has no condition attached.

Retirement villages add one more wrinkle: units in a good village come up irregularly. If you have found the one you want, that often forces the sequencing rather than the other way round. Worth knowing before you get attached to a plan.

The costs people do not see coming

• Levies in a retirement village are usually higher than an ordinary complex, because they carry the staffing, security and often the frail care facility. Ask for three years of levy history, not just this year's figure.
• Ask specifically what happens if you need frail care later — whether it is guaranteed, what it costs, and whether there is a waiting list.
• Moving costs, and the cost of storing or selling forty years of furniture that will not fit.
• Compliance certificates on the house you are selling. On a home held for decades, the electrical certificate is where the surprise usually lives.
• If you are leaving a freestanding home for a levied unit, the monthly running cost sometimes goes up rather than down. Compare like with like before you assume downscaling is cheaper.

Timing, and being honest about it

The most expensive version of this move is the one made in a hurry after a fall or a diagnosis, when the family sells under pressure and takes the first offer. The least expensive is the one planned two years early, from a position where you can say no.

If you are reading this and are not ready yet, that is the right time to be reading it. Get a valuation, understand your number, look at two or three villages while there is no urgency, and put the decision down again. Nothing obliges you to act on it.