Should you keep your home, downsize or rent in retirement?
Compare staying, downsizing and renting from the same balance sheet, showing investable capital and the full monthly housing bill.
Set that comparison beside access to family, care, security, transport and manageable maintenance.
Keep the starting position the same
Assume a R3 million home, R300,000 outstanding loan, R1.2 million of investments and R150,000 selling costs. A sale releases R2.55 million before CGT.
Buying a R1.9 million home with R130,000 purchase and moving costs releases R520,000 before CGT. Renting costs R22,000 to move and set up plus a separate R28,000 refundable deposit, leaving R2.5 million before CGT.
Replace these invented prices with quotations. Deposits reduce available cash even when refundable; confirm commission, conveyancing, transfer duty, loan settlement and initial work.
Put all three choices side by side
Use identical cost categories. Include an illustrative R18,000 CGT provision in both sale options, explained below:
| Comparison item | Keep current home | Buy smaller home | Sell and rent |
|---|---|---|---|
| Extra capital before CGT | R0 | R520,000 | R2,500,000 |
| CGT provision on this sale | R0 | R18,000 | R18,000 |
| Extra capital after CGT | R0 | R502,000 | R2,482,000 |
| Total investments including existing R1.2m | R1,200,000 | R1,702,000 | R3,682,000 |
| Housing equity after the decision | R2,700,000 | R1,900,000 | R0 |
| Monthly loan payment or rent | R3,000 | R0 | R14,000 |
| Other monthly housing costs | R5,500 | R6,000 | R3,000 |
| Total monthly housing cost | R8,500 | R6,000 | R17,000 |
The refundable deposit is separate from investments and permanent expenses. Each column includes existing investments; debt reduces the retained home’s equity while its payments remain in the budget.
Owners’ other costs include rates, levies, utilities, insurance and maintenance; tenants retain their own utilities and insurance. Adapt these to actual properties and leases.
Compare tax on the same sale
The 2026/27 primary-residence exclusion covers up to R3 million of qualifying gain or loss, not the sale price. The SARS exclusions and residence conditions govern the calculation.
For the friction test, assume the practitioner determines a R1.2 million total gain: R1 million qualifies for the residence exclusion, but R200,000 does not because of past rental use. With the full R50,000 annual exclusion available, 40% inclusion and a constant 30% marginal rate, the tax is R18,000: (R200,000 − R50,000) × 40% × 30%.
Both sale options deduct that same tax. Your result may be zero or higher, depending on ownership, use, base cost and other gains; keeping the home does not trigger this sale.
Ask what the extra capital must fund
Downsizing saves R2,500 monthly and releases R502,000 after assumed tax. Renting doubles housing spending but releases R2.482 million. Model income and capital together.
First-year rent is R168,000, about 6.8% of the R2.482 million released after tax; total housing costs are R204,000. These are spending ratios, not sustainable withdrawal rates.
Compare actual income quotations or withdrawals through weak markets, adding other spending, tax and future rent increases. Check whether a lease can be renewed or replaced affordably.
Price the future move as well
Staying can preserve support but require adaptations and paid help; a smaller home can reduce work yet introduce levies; renting improves mobility but adds occupancy uncertainty.
Assess care, transport, stairs and space for assistance, including each survivor’s needs and the possibility of only one partner entering care.
Price the actual transaction
Obtain estate-agent and conveyancer quotations and the practitioner’s SARS primary-residence calculation. Have an attorney check occupation rights and the contract; assess investment suitability separately. The R18,000 provision illustrates one assumed sale, not your property’s tax.
Your next step
Obtain net sale and housing quotations and test after-tax capital through higher rent or care costs; if the numbers and reviewed occupation terms still work, proceed with the housing decision; if not, adjust while you still can.