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| © Getty Images | A retiree at home eating lunch. |
By Jeanne Lee, Bankrate
Most Americans over age 50 prefer to remain in their current home and community as they get older, according to AARP - but to do that, many will need to increase the accessibility of their home by making home modifications.
"What not everyone considers is that you can save money by doing the
right home modifications," says DeDe Jones, a certified financial
planner and managing director of Innovative Financial in Lakewood,
Colorado. "The longer you can safely live in your home, the less you
will need to pay for assisted living care, something that is not cheap."
Here's what you need to know about making home modifications as you reach your later years.
- Best home modifications for aging in place
- Home improvements vs. home modifications
- How to pay for home modifications
What is an aging-in-place home modification?
Home
modification means physically changing your home in order to make it
easier to move around, remove potential hazards and support independent
living. There are many different types of home modifications, which can
range from low-cost to expensive.
Best home modifications for aging in place
The
best aging-in-place home modifications align with "universal design,"
an architectural term for features that are easy for all to use and
adaptable as needs dictate. This includes additions and changes to the
exterior and interior of a home.
Examples of exterior and interior modifications
- Automatic push-button doors
- Doorway ramps
- Well-lit and widened doorways, hallways and stairways
- Porch or stair lifts
- First-level master suite
- Accessible light switches and outlets
- Removal of trip hazards such as carpeting or molding
Bath and kitchen modifications
- Cabinet pull-out shelves
- Lower countertops
- Touchless faucets
- Grab bars and railings
- Roll- or walk-in shower or tub
- Shower bench
Keep
in mind that certain home modifications are well within the skills of
DIYers, while others will require a professional. Simple home
modifications can be done one by one, over a period of time, by yourself
or with help from a handy friend or relative:
- Adding easy-grip knobs and pulls
- Installing adjustable handheld showerheads
- Rearranging furniture for better passage
For
bigger modifications, such as those that involve electrical work or
heavy lifting, it's best to work with a professional contractor. These
may include:
- Installing handrails
- Adding automatic lighting outdoors
- Smoothing out flooring
Home improvements vs. home modifications
Like
home improvements, home modifications can increase the functionality of
the property. A modification, however, may also be tax-deductible as a
medical expense if it is made to accommodate the disabilities of someone
who lives in the home, according to the IRS.
By contrast, home improvements that are made for aesthetic reasons or
to increase the home's value are generally not tax-deductible.
What counts as a home modification for tax purposes? As the IRS
outlines, capital expenditures for installing special medical equipment
or reasonable home modifications made for medical reasons are sometimes
fully tax-deductible, as long as they don't add to the property value.
Permanent home improvements that do increase the value of your property
may still be partially deductible as a medical expense - the cost of the
improvement minus the increase in the property value is the amount that
can be considered.
As with all tax-related considerations, it's
important to consult with a tax professional about your eligibility for
this deduction.
How to pay for home modifications
There are a number of ways to pay for home modifications. One option is a home improvement loan,
either a home equity line of credit (HELOC), home equity loan or
personal loan. Other alternatives include a reverse mortgage, or seeking
assistance from your state housing agency.
Home equity line of credit -
If you have considerable home equity, you can borrow against it in a
home equity line of credit to finance home modifications. HELOC interest rates tend to be low, since your home is collateral for the loan, and you can draw funds from it as needed.
Home equity loan - A home equity loan
is a lump sum that can be used to make home modifications. Like HELOCs,
home equity loans tend to have a relatively lower interest rate than a
personal loan because your home is used to secure it. With both a home
equity loan or a HELOC, you can deduct the interest on up to $750,000 of the loan if the funds are used to “substantially improve” your home, according to the IRS.
Personal loan -
Best for those with good credit, a home improvement personal loan from a
bank, credit union or online or peer-to-peer lender generally doesn't
require a lien to be placed on the home.
Reverse mortgage - If you're 62 or older and own your home, you may be eligible for a reverse mortgage,
which converts a portion of your equity to cash while allowing you to
continue living in the home. One of the most common kinds is a home
equity conversion mortgage (HECM).
State housing finance agency loans -
Lastly, state housing finance agencies (HFAs) provide loans for many
purposes, including developing supportive housing for seniors and people
with disabilities. Check for an HFA in your area to learn your options.
When should I make home modifications?
Getting
older is a process, so it's likely you'll need to adapt your home more
than once as your needs change. You can add home modifications gradually
or all at once, if finances allow. Sometimes it's cost-effective to add
aging-in-place home modifications as part of other planned renovations,
such as building an addition or remodeling a kitchen.
Then again,
since new assistive technologies hit the market year after year,
further home modifications may be necessary. The more you're able to
anticipate your evolving needs, the more you can plan ahead for home
modifications that you're likely to need in the future.
See more at Bankrate
