There is a website that is designed to help people make the decision on whether to move or remodel. It's: http://www.remodelormove.com/index.cfm .
You can also call me or email me directly if you want to talk in more detail outside this forum. Just click on my name to get my information. I wrote an article in the San Jose Mercury answering a similar question. Should I post it here?
To add onto what Mary said, Prop 60 and Prop 90 are designed for seniors - as long as one of the owners is over age 55 when the home is sold. Another fine point is that it allows you to purchase upto 105% of the sale price of your current home if you close on your new home between day 1 and day 365(6) or up to 110% between 1 year and 1 day to up to 2 years after you close on the sale of your home.
Unfortunately, that's not much room to play with; and it also limits you to the few counties that accept prop 90.
To combat that, there are certain initiatives being considered now, one is to expand prop 90 counties (perhaps to the whole state), another is to allow moving up where the increased tax base will be the difference between the value of your sold home and the new home you are going to purchase; so those are the good news.
If you decide to buy a larger home, keep in mind that you might be able to write of part of the increase.
In the mean time, whether you expand or buy a larger home will probably depend on your goal.
Do you like the current location you are in? Can you see yourself stay there for a long period of time? Can you put up with the inconvenience of a major remodel, especially if you have to change the footprint or add another lever? Will the zoning allow it? Does this make your house the most expensive house on the block and how will the resale value be? Will the design plan fit your needs or do you really prefer to have something totally different? Will the extra living space take up your outdoor space? All these can be part of your consideration.
The decision might not be as easy as just money thatâ€™s involved.
Good luck and please let me know if I can help you in anyway. Depending on where you are, we can also come out and help you decide the kind of remodel you might want to do.
Before I give any more answers I am curious about why you need a larger home? The circumstances might help us guide you with better alternatives.
One thing to remember is that the Prop 60/90 option is only doable ONE TIME. Depending upon your age and situation there might be some other options.
My wife and I went through a remodel 2 years ago - kitchen and additiona downstairs. I don't recommend it. We had a good architect and a good contractor but it still got ugly at the end. When I was in construction we used to joke that we should have a marrige counselor on staff.
When I work with clients facing this issue, and I have many times, I adivise that you explore what you want to do. In other words where do you want that you don't have know. Then find out how much that would cost and think REALISTICALLY what will it be like to go through the process. Then see if you can find a house that will give you what you are looking for. So far in my experience the clients I've worked with have opted to move up rather than remodel and they are very happy with the decision they made, taxes and everyting. In fact one expressed it this way "Money is important but your emotional well being is much more important"