18 things retirees need to know before downsizing in 2026

# Overview Selling a long-time family home to move into something smaller often makes financial sense, but it's not an automatic win. In 2026 the practical calculus depends on taxes, market conditions, commissions, moving costs, retirement rules, and personal priorities. This brief pulls together the concrete facts and choices retirees should consider before listing the house.

# What matters first: the tax break on the sale If you've owned and lived in your home for at least two of the last five years, you can exclude up to $250,000 of profit if single or $500,000 if married filing jointly. For many retirees who bought decades ago, that exclusion eliminates federal tax on the home sale.

# How much equity you actually have Homeowners 62 and older collectively hold about $14.92 trillion in home equity. The median homeowner 65+ has roughly $250,000 in equity. That shapes how much cash you can reasonably expect after paying commissions, repairs, and closing costs.

# The market you're selling into

# Agent fees are negotiable now A 2024 legal settlement changed how buyer-agent fees work. Buyers sign written agreements with their agents and commissions are not automatically built into seller offers. The current national average total commission is around 5.7 percent and is fully negotiable. Even a one-point cut on a $500,000 sale keeps an extra $5,000 in your pocket.

# Don't forget the hidden and one-time downsizing costs

# Other financial consequences to check

• A large profit on the sale can raise your Medicare premiums if it affects your income-based calculations.

• Property tax breaks or portability rules you enjoy may not transfer to a new place.

# Alternatives and comparisons

# Nonfinancial considerations that change the math Many retirees discover they don't actually want to leave. Proximity to family, neighborhood relationships, and daily routines affect quality of life in ways spreadsheets miss. Waiting for a housing crisis or health emergency forces hurried decisions and fewer choices.

# Practical next steps Get a recent market-facing appraisal or competitive market analysis, ask potential agents for specific fee quotes, estimate one-time moving and setup costs, run the sale proceeds through your Medicare and tax picture, and compare staying versus moving with concrete repair and property-tax numbers. That yields a realistic, not optimistic, outcome for 2026.