From the Blog
Selling the Family Home in Retirement: The Equity, the Taxes, and the Plan
The median home equity held by Americans 65 and older is about $250,000, according to a Harvard analysis of recent federal survey data. For many empty nesters, selling the family home converts that equity into a smaller mortgage, funded travel, or a cushion for the years ahead, and most sales qualify for a full tax exclusion. Here is what to know before you put the sign in the yard.
The median home equity held by Americans 65 and older is about $250,000, according to a Harvard analysis of recent federal survey data. For many empty nesters, selling the family home converts that equity into a smaller mortgage, funded travel, or a cushion for the years ahead, and most sales qualify for a full tax exclusion. Here is what to know before you put the sign in the yard.
Start with the equity number
A Harvard analysis of the most recent federal survey data found the median home equity for homeowners 65 and older is about $250,000, roughly 47% higher than the same figure in 2019, and the National Council on Aging reports the same number. In San Antonio, where long-time owners bought decades ago, the equity in a family home is often even larger relative to the smaller home they would buy next. That spread is the entire financial case for right-sizing: it can pay for the next home outright or leave real cash on the table.
The capital gains rule most sellers forget
Under Internal Revenue Code Section 121, a single homeowner can exclude up to $250,000 of gain on the sale of a principal residence, and a married couple filing jointly can exclude up to $500,000, provided they owned and lived in the home for at least two of the five years before the sale. Nine times out of ten in a retirement downsizing, the gain falls inside that exclusion, which means no tax on the sale. Keep your closing records and any records of major improvements anyway, because the exclusion is generous but it is not automatic for every situation.
The San Antonio context for senior moves
Seniors are the fastest-growing age group in Bexar County: between 2010 and 2019 the 70 to 74 age bracket grew 59.6%, and the 65 to 69 bracket grew 49.9%, per Census estimates reported by the San Antonio Express-News. That demand is why 55+ communities, patio homes, and single-story floor plans keep multiplying from Boerne to the northeast side. It also means a well-priced, well-presented smaller home in this market has a strong, steady pool of buyers.
When selling first makes sense
For most retirees, selling first and buying next is the cleanest path: it puts cash in hand, avoids the stress of two moves, and lets you negotiate the new home as a strong, unpressured buyer. The trade is a temporary rental and a second move. Buying first avoids the rental but adds the risk of carrying two homes if the sale is slow. In today's balanced market, roughly six months of inventory and a median near $315,000, the sell-first path is practical for more people than it was a few years ago, and I walk through both sequences with every client.
The tax paperwork that matters most
On your new home, the single most valuable piece of paperwork is the homestead exemption filing, and for buyers 65 and older it matters even more: Texas offers an additional $60,000 exemption on top of the $140,000 school exemption, and the school tax ceiling in Tax Code Section 11.26 freezes the school portion of your bill once you qualify. Property taxes reset for a new owner, so the previous owner's bill is never your bill. My property tax guide has the full county-by-county detail, and I always pull the last two years of tax history on any home you seriously consider.
What to do with the proceeds
The equity is the point, and there is no one right use for it. Some clients pay cash for the smaller home and keep their retirement accounts untouched. Others take a modest mortgage, invest the rest, or set aside a care and travel fund. Mortgage rates in 2026 mean the cost of carrying a small mortgage is a real line to weigh against the flexibility of cash. These are personal and financial questions, so I work with your tax advisor and financial planner on the numbers, and I keep my promises simple: honest advice, local insight, no pressure.
Written by Phyllis Domingo
REALTOR® · TX License 745926 · 100+ homes sold · Helping families move well in San Antonio and the Hill Country since long before the hard part became normal.
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