How am I doing - should I sell my house?

[dooger]

Hi,

I am new to the forum and would love the opportunity to get some feedback on my financial situation. I am primarily wondering if I should change my housing situation.

I am 54, a single (divorced x 5 years) woman with two grown (mostly) financially independent children.

Income

$6,000/monthly paycheck after taxes, 403(b) and HSA deduction
$1,200/monthly rental income from converting part of my house into in-law unit and renting

Total $ 7,200

Expenses

Mortgage $ 2,394/month
HELOC interest only payment ~ $90/month
Utilities $176/month
Property taxes $772/month
Home owners insurance $130
Car $200/month (fuel,insurance and tolls only, no payment)
Internet $85/month
Cell phone $100/month
Savings to Roth $540/month
Entertainment (movies, books, newspapers) $135/month
Groceries including take-out $500/month
Gifts/donations $150/month
Personal care $140/month
Pet care $ 500/month (food, vet, grooming, daily dog walker when I'm working)
Pharmacy $46/month
Home maintenance $ 200/month
Travel $250/monthly (travel to Europe x 1 yearly to see my family)
Clothes $150/month
Restaurants $120/month

Total $ 6,678

Assets

Vanguard IRA $244,000
Vanguard brokerage $44,000 (ER fund)
Vanguard Roth IRA $7,300

403 (b) $84,000

2007 Volvo V50 (no payment) with 70,000 miles

My house $ 1,100,000 per Zillow

Liabilities

Mortgage $ 505,700 30 year fixed @ 3.625%

HELOC $ 26,700 @ 4.0%

I am maxing out 403(b) $24,000/year + ~ $4,000 company match, and maxing out Roth IRA $6,500/year and HSA $4350/year

I live in a desirable Bay Area suburb about 2 miles from work. In order to downsize my house I would need to spend at least $450,000 on a condo in order to stay close to work. Would it be worth it? I would loose the rental income and probably have to pay HOA fees. I thought of selling the house, putting $250,000 of proceeds into a condo and the rest into Vanguard. I would take a 15 year ~ $200,000 mortgage and pay off in about 10 years... Mortgage free by age 65-67...
Or should I stay put and start attacking the mortgage/HELOC? Or increase my after-tax savings?

I am very aware of savings I could get from cutting living expenses, i.e. pet expenses, food etc. - I am primarily seeking feedback on what makes sense with the housing situation. Any wise Mustachians out there willing to comment?

Thank you!

[marblejane]

What is your basis in the property? Here I'm thinking of two things- that taxes that you could expect to pay on a condo versus the taxes that you are paying now (likely your property tax increases are capped because of your homeowner status) as well as the tax implications of selling your house (I think that the first $500k of capital gains from selling a primary residence are exempt, will you have more than that?)

One option I'd consider is moving into the in-law suite and renting out the main residence. This could at least be a short-term solution as you consider whether or not to sell.

Do you plan to stay in the area after FIRE? When do you plan to FIRE? Ultimately, it seems like you will need to unlock some liquidity from your home value in order to retire, and you likely have too much house for 1 person anyway, so it's probably a matter of figuring when is the right time to sell.

[Cassie]

My first thought which the above poster already mentioned is moving into your in law suite. This would let you stay in your home but get much more for rent.

[SaintM]

As a single taxpayer, only the first $250k in gain on the house is exempt. Is will come into play if you had a run up in value and/or you have taken the depreciation deduction on your mother-in-law suite.