Downsizing after the death of a spouse: what to decide now and what can wait

We are sorry for your loss. The house you share, or shared, holds years of your life, which is why this decision feels so different from an ordinary move. You do not need to settle it today, and nothing here is meant to push you toward selling.

Why many advisers suggest not rushing

Many financial planners suggest waiting a while before selling the home after a loss, with six months to a year the figure often mentioned. That is a rule of thumb and not a law. Grief does not run on a calendar. The reasoning is simple. A house that feels too big or too quiet in the first weeks may feel different later, and a decision made quickly is harder to undo.

Rushing can also cost money. Selling and moving twice is expensive, and a hurried listing may not get the preparation it deserves. On the other hand, some people find that staying is the harder choice, because the upkeep is more than they can carry alone. Both are fair reasons. Our guide on coping with downsizing speaks to the feelings that come with leaving a long-time home.

A useful way to think about it: separate the decisions that have a clock from the ones that do not. The next sections list the first kind.

The deadlines that do exist

Everything else, including listing the house, choosing a new place and sorting belongings, has no legal deadline. You may want to ask an attorney whether anything on your own list needs a date, such as probate filings or a mortgage payment.

Sources: IRS Publication 523; Hillsborough County Property Appraiser, Homestead and Other Exemptions; Fla. Stat. 732.401.

Title and the deed: whose house is it now?

Before you sell, you need to know exactly who owns the house today. This is paperwork rather than emotion, and a short meeting with a Florida attorney or a title company usually settles it.

• Owned together with survivorship rights: the Florida Bar says property held jointly with rights of survivorship passes outside probate. Section 732.401, which governs homestead when there is no will, says it does not apply to property held by the entirety or as joint tenants with survivorship. The survivor normally records a death certificate.
• In your spouse's name alone: it may need to go through probate, and a will, if one exists, matters.
• In a trust: the trust document controls.

Homestead has its own rules. Section 732.4015 says homestead cannot be devised if the owner leaves a spouse or a minor child, except to the spouse when there are no minor children. If your spouse left no will and there are children from a prior marriage, the house may not be entirely yours. Under s. 732.401, a surviving spouse may take a life estate while the descendants take the remainder, or may elect within six months to take a one-half interest in common instead. That election is made by recording a notice. If this fits you, speak with a probate attorney soon, because it affects who must sign when you sell.

If you are the personal representative, see our guide on selling a parent's house in Florida for how a sale works through probate. The steps are the same whether the person who died was a parent or a spouse.

Sources: The Florida Bar, Probate in Florida; Fla. Stat. 732.4015; Fla. Stat. 732.401.

Selling the house after a spouse dies: the federal tax rules

Two federal rules work in your favor, and they are worth understanding before you set a date. Our guide on capital gains on a home sale in Florida has the full background.

The two-year window

Normally a single owner can exclude up to $250,000 of gain on a home sale and a married couple up to $500,000. IRS Publication 523 says a surviving spouse who has not remarried can still use the $500,000 limit if the sale happens within two years of the spouse's death. It also lets you count your late spouse's time owning and living in the home. After two years, you would generally be back to $250,000 as a single filer.

For many couples who bought decades ago, a gain of $250,000 or less is common. The window matters most when the home has grown a lot in value. Calculate your own gain before assuming it affects you.

The new basis

Your basis is what the tax is measured from. For a jointly owned home, the IRS says the surviving spouse's new basis is the sum of two parts: the late spouse's half at its fair market value on the date of death, and your half at its existing adjusted basis. This usually lowers the taxable gain.

Hypothetical, with made-up numbers: a couple's adjusted basis in the house is $200,000, so each half is $100,000. The house is worth $500,000 when one spouse dies, so that spouse's half is $250,000. The survivor's new basis is $100,000 plus $250,000, or $350,000. If the home later sells for $520,000 with $30,000 of selling costs, the amount realized is $490,000 and the gain is $140,000, which fits inside even a $250,000 exclusion.

A date-of-death appraisal is the paper that supports the new basis. Order one early, since it is hard to reconstruct later. Keep it with your closing statement and records of improvements.

Source: IRS Publication 523, Selling Your Home.

Widow property tax exemption in Florida

If you keep the house for now, or buy a smaller home and apply for homestead there, there is a modest exemption for widows and widowers. Section 196.202 of the Florida Statutes provides a $5,000 exemption for a widow or widower who is a bona fide Florida resident. The Hillsborough County Property Appraiser adds that the applicant must have been married to the deceased at the time of death, that a divorced or remarried applicant is not eligible, and that a copy of the death certificate or obituary and the homestead application (Form DR-501) are required.

It is small, but it is real, and it is easy to miss. Two other points are worth knowing:

• The Property Appraiser lists a homestead exemption that continues in a deceased owner's name as an improper exemption. Update the record so the exemption is in your name.
• The deadline is March 1. The Property Appraiser says late applications may be accepted until the 25th day after the notice of proposed property taxes is mailed, typically in August.

For the broader picture of Florida exemptions and the assessment cap on a long-held home, see our Costs and Money page. The Property Appraiser's office, at (813) 272-6100, can tell you what to file after a death.

Sources: Fla. Stat. 196.202; Hillsborough County Property Appraiser.

Moving after the death of a spouse: portability and your next home

If you decide to move within Florida, you may be able to carry part of your Save Our Homes savings to the next home through portability. The deadlines and the dollar limit are covered in our guide on Florida homestead portability, and our portability calculator can estimate the effect. A homestead that passes to a surviving spouse under s. 732.401 is one of the transfers that the assessment statute does not treat as a change of ownership (s. 193.155(3)), so the cap can continue while you stay.

If you are choosing where to go, a lower-maintenance home is often the main goal. Our guides on downsizing to a condo in Tampa and senior living options in Tampa describe the choices, and where to downsize introduces neighborhoods to visit. If you are weighing whether to stay put with some help, read aging in place vs downsizing.

Sources: Fla. Stat. 193.155; Fla. Stat. 732.401.

Pacing the house itself

Whenever you start, the house is full of belongings that carry memories. A gentle pace helps. Some people find these steps manageable:

• Start with the easy rooms. A guest room, a hall closet or the garage, rather than the bedroom or a study.
• Keep a "not yet" box or room. Items you cannot decide on go there and wait, with no deadline.
• Ask family to take what they truly want before anything leaves, and give them a date that suits you.
• Handle paperwork first. Wills, deeds, insurance papers and statements go in one folder.
• Accept help. A friend, a relative or a professional organizer can work beside you so you are not alone with it.

Our guides on what to keep when downsizing and estate sale, consignment or donation can help with sorting when you are ready. The step-by-step downsizing guide puts it all in order.

Looking at the money first

Before you decide to stay or sell, it helps to see the numbers on paper. Two guides are useful: estimating net proceeds shows what a sale might leave after costs, and is downsizing worth it weighs savings against the cost of moving. If you worry that the sale will not cover a longer retirement alone, ask a CPA or a fee-only financial planner about your options. The resources page lists places to start.

When you are ready

If you decide that selling is right, a good agent will work to your timeline rather than a calendar of their own. You can request an introduction whenever it suits you. Introductions go to agents on the operating team at eXp Realty, so this is not a search of the whole market, and the agent, not this site, handles the sale. Tell the agent what you are comfortable with, including whether you want more time in the house after a closing date.