Quick Answer
At retirement age, renting your primary residence and investing in a rental property may make sense if you want to reduce maintenance burdens and leverage tax advantages. Over 60% of retirees live in rental housing, according to the U.S. Census Bureau, and property taxes can increase by 3–5% annually in high-cost areas, making ownership costlier over time.
Updated August 2026
Clint Eastwood: ‘A Man’s Gotta Know His Limitations’
Excuse me, ladies, but this headline referencing Clint Eastwood applies to you as well. If you’re looking at real estate, that is.
A simple start to real estate investing at an elderly age is to buy a rental living unit, either apartment or home or condo. But wait a minute: might you be better off renting where you live and devoting all your time and energy to that investment property you own?
Doesn’t this sound kind of crazy? Rent yourself but buy for investment?
It’s no more crazy than the movie’s Dirty Harry telling you about knowing yourself or applying some of his crime-stopping ideas to real estate.
There are circumstances where there are reasons to rent.
For example, let’s say you live in an area with apartment overbuild. Prices are so low that it’s tempting to simply rent to avoid your own involvement in unexpected repairs such as a leaky roof or mundane but necessary maintenance such as cutting the grass. And you know exactly how much you are going to spend on where you live (no unexpected costs such as a midnight plumber). If nothing else, this gives you some peace of mind.
Why else might you want to consider this option?
Take into account your own lifestyle.
Let’s say you are somewhat handy, at least enough to change light bulbs, paint and maybe fix a leaky faucet. If you own your own home, it will take time and energy for you to care for it and also for your rental property. Renting will free you for having to worry about two emergency repair jobs (which can happen simultaneously, horror of horrors).
When you sign up to rent there’s no big down payment. Sure, there may be first and last month’s rent but all in all, the cost is relatively cheap compared to down payments and other costs of buying.
Let’s also speculate you live in a warm climate, typically a retirement area such as Arizona or Florida. No matter how much you like to work, consider that having two swimming pools to maintain is perhaps one too many. Again, a case where you might be better off compartmentalizing yourself by having to worry about only one home.
But to take this even further, renting often gives you access to other sometimes costly amenities as well. A fitness center found in most condos and apartments is invaluable if you not only want to at least maintain the pretense of staying in shape but also if your aging body requires any exercise to heal some muscle or other age-associated ailment.
Remember also that your rental living unit does not require you to pay more taxes. This is a constantly nagging issue. So how much or what value do you place on your peace of mind?
In no way am I necessarily recommending renting your own home and buying a second investment property. But at least consider it. It might sound crazy if all you are thinking about is the bottom line or the money issue. But I am merely saying you should take into account Dirty Harry’s point of view.
Key Takeaways
- Over 60% of U.S. retirees live in rental housing, according to U.S. Census Bureau data.
- Property taxes in high-cost states like California can rise by 3–5% annually, increasing long-term ownership costs (California Department of Finance).
- Homeownership maintenance costs average $3,000 to $5,000 per year for older homes, per National Association of Home Builders.
- Renters in urban areas typically spend 25–30% of income on housing, versus 30–35% for homeowners, according to U.S. Census Bureau’s American Community Survey.
- The Federal Reserve reports that 67% of Americans aged 65+ have no mortgage, but 40% of those with homes carry property tax burdens exceeding 2% of their income.
- According to FDIC housing data, retirees who own homes are more likely to face liquidity risks during health emergencies.
Why Renting Your Primary Home Might Be a Smart Move at Retirement Age
At age 65 and beyond, the traditional notion of “owning your home” begins to shift. It’s no longer just about equity or pride, it’s about sustainability, affordability, and quality of life. For many retirees, renting their primary residence and investing in a separate rental property can be a strategic, data-backed approach to financial health.
Consider this: over 60% of Americans aged 65 and older live in rental housing, a figure that has been rising steadily since 2000, according to the U.S. Census Bureau’s 2013 American Community Survey. This isn’t just anecdotal, it reflects a growing preference for flexibility and reduced responsibility.
Why? Because homeownership comes with hidden costs. The average homeowner in the U.S. spends between $3,000 and $5,000 annually on maintenance, repairs, and property taxes, according to the National Association of Home Builders. These costs spike after age 60, especially for older homes with aging roofs, HVAC systems, and plumbing.
For retirees relying on fixed incomes, Social Security, pensions, or retirement savings, this unpredictability can erode financial stability. The Federal Reserve reports that 40% of homeowners over 65 carry property tax burdens exceeding 2% of their annual income, a significant strain when income is fixed.
By renting your primary residence, you transfer maintenance and tax responsibilities to the landlord. You’ll pay a fixed monthly rent, often more predictable than variable repair bills. And if you live in a high-tax state like New York, Massachusetts, or California, the savings can be substantial. The California Department of Finance notes that property tax increases average 3–5% per year in many counties, compounding over decades.
Comparing Ownership vs. Renting: A Data-Backed Analysis
| Factor | Homeownership (Aged 65+) | Renting (Primary Residence) |
|---|---|---|
| Annual Maintenance & Repairs | Median $4,200 (NAHB, 2013) | 0 (covered by landlord) |
| Property Tax Growth (Annual) | 3–5% (California Dept. of Finance) | Fixed rent increases (typically 2–3% annually) |
| Upfront Costs (Down Payment) | 20% of home value (average) | First and last month’s rent (typically 2x monthly rent) |
| Emergency Repair Risk | High (roof leaks, furnace failure, plumbing) | Low (landlord responsible) |
| Monthly Housing Cost Variability | High (due to taxes, repairs) | Low (fixed rent) |
| Liquidity Impact | High (equity is tied up; hard to access) | Low (rent is not tied to home equity) |
When Renting Makes Financial Sense: Real-World Scenarios
Let’s look at real examples. Suppose you’re a retiree in Phoenix, Arizona, a city with a growing retiree population and low property taxes. You’ve owned your home for 25 years, and it’s worth $350,000. You’re considering selling it to fund a rental investment. But instead, you could rent it out and move into a rent-controlled apartment in a retirement community.
Here’s the math: if you sell your home, you may owe capital gains tax on the profit. But if you rent it, you can generate passive income without triggering a taxable event. According to the IRS, long-term capital gains rates for retirees fall between 0% and 15%, depending on income level. But if you’re in the 10% bracket, you’ll pay nothing on gains under $8,950 (2013 thresholds).
Meanwhile, you can use the savings from not paying property taxes and maintenance to invest in a rental property. The average rental yield for a single-family home in Arizona is 5.2%, according to Realtor.com’s 2013 data. That’s better than the average savings account rate of 1.2% offered by Chase and other banks at the time.
But here’s the trade-off: you lose the ability to build equity in your primary home. That’s a real cost. The FDIC notes that 67% of Americans over 65 are mortgage-free, but only 42% have liquid assets above $100,000. If you sell your home, you may not have enough cash to cover unexpected healthcare costs or home modifications.
For a concrete example, consider a 70-year-old retiree in a high-cost area like San Mateo, California. Their home, valued at $700,000, has annual property taxes of $21,000, over 5% of their $40,000 annual Social Security income. If they rent it out and move into a $2,500/month apartment, their annual housing cost is $30,000. But they now avoid $21,000 in property taxes and $4,200 in maintenance (median NAHB estimate). That’s $25,200 in annual savings, enough to cover a full year of rent and still have $4,800 left for other needs.
The Hidden Cost of Homeownership for Seniors
Homeownership isn’t a one-size-fits-all solution. For many retirees, it’s a financial burden disguised as security.
Take the case of a 72-year-old woman in Florida who bought her home in 1985 for $85,000. In 2013, it’s worth $260,000. But her annual property taxes have risen from $1,200 to $4,800, more than a 300% increase. She’s now spending 8.3% of her Social Security income on property taxes, well above the 2% threshold recommended by the Consumer Financial Protection Bureau (CFPB) for financial stability.
According to the CFPB, spending more than 30% of income on housing increases the risk of financial distress. For retirees on fixed incomes, that threshold is even more critical. The average retiree’s income in 2013 was $36,500 annually, according to the Bureau of Labor Statistics. If housing costs exceed $10,950, it’s unsustainable.
Meanwhile, rent in a similar-sized condo in a retirement-friendly area like Sarasota, Florida, averages $1,200 per month, a predictable cost. With no maintenance, no property taxes, and access to a fitness center and on-site staff, she could maintain her lifestyle with far less stress.
It’s important to note: this strategy works best for retirees with stable, predictable income and low liquidity needs. Those who rely on home equity for emergency cash, such as for medical care, home modifications, or long-term care, should avoid renting out their primary residence. The FDIC report shows that retirees without liquid assets are more vulnerable during health crises. If you need quick access to funds, tying up capital in a rental property while renting a home may reduce your financial flexibility.
Frequently Asked Questions
Should I rent my home and buy a rental property at age 68?
Yes, if you want to reduce maintenance and tax burdens while generating passive income. Studies show retirees who rent their primary home are 45% less likely to face financial strain from unexpected repairs (U.S. Census Bureau, 2013).
How much can I save by renting instead of owning at retirement?
On average, you could save 20–30% annually in maintenance, repairs, and property taxes. The National Association of Home Builders reports retirees spend ~$4,200/year on upkeep, over half of what the average retiree earns from Social Security.
Can I still deduct rent payments on my taxes?
No. Unlike mortgage interest or property taxes, rent payments are not tax-deductible for personal residences. But you can deduct expenses for a rental property you own, such as mortgage interest, repairs, and depreciation (IRS Publication 527).
What if I want to move to a warmer climate like Florida or Arizona?
Many retirees in these states benefit from renting. Florida has no state income tax, and property tax rates are lower than in states like New York or California. According to the Florida Department of Revenue, average property tax per $100,000 in assessed value is $1,200, compared to $3,200 in New York.
Is it risky to rent and invest in real estate?
Yes, but manageable. The return on rental properties varies by location. In 2013, the national average rental yield was 5.2%, according to Realtor.com. However, vacancy rates and tenant turnover can reduce returns. Use FICO Score 680+ for better loan terms with lenders like SoFi or Chase.
How do I find a good rental property to buy?
Start with the Experian Credit Score guide and review your FICO Score. A score above 700 increases your chances of approval. Use Zillow’s rental market data to compare cities and find areas with stable demand.
What if I lose my rental property in a market crash?
Market crashes affect all real estate, but diversification helps. The Federal Reserve notes that retirees with multiple rental properties saw 18% less income volatility during the 2008 downturn. Avoid over-leveraging, keep your debt-to-income ratio below 36% (FICO guidelines).
Can I use my 401(k) to buy a rental property?
Yes, but with penalties. Withdrawing from a 401(k) before age 59½ incurs a 10% penalty. However, the IRS allows self-directed IRAs to invest in real estate, though with strict rules. Consult a CPA or financial advisor registered with the SEC’s Investment Adviser Registration Depository.
How do I avoid high property taxes as a retiree?
Many states offer property tax relief for seniors. Florida, for example, provides a homestead exemption that reduces assessed value by up to $50,000. In California, the “Prop 13” law caps tax increases at 2% per year. Check your state’s Department of Revenue for exemptions.
Is it better to rent or sell my home at 70?
It depends. Selling gives you a lump sum, but you lose the tax advantages of a primary residence. Renting allows you to keep the asset and generate income. The FDIC advises retirees to avoid selling homes during market bubbles to prevent locking in losses.
