Hand-me-downs are a way of life in our home. A change of season means it's time to pull out the tubs of clothing from storage and find out what we will need to purchase, and what we already have. Out of season clothes are put back in the tubs for the next year and the next child. However, sometimes it makes more sense to repurpose winter clothes that still fit than it does to go out and purchase "new" ones.
Clothes that are too worn to pass on are great candidates for repurposing. Jeans with holes in the knees can be turned into shorts by cutting off the bottom of the legs. Long-sleeved shirts can be turned into Tshirts in the same way by cutting off the sleeves. The pant legs and sleeves can be hemmed, but it's not really necessary since the clothes are already grungy and will just be used for play.
Another good time to try repurposing is when you find yourself needing to purchase summer clothes for a child who has no younger siblings. Why give away all their winter clothes when they could just wear the same clothes for another season? In this situation, however, you will want the clothing to look nicer. That's why I love this kind of shirt:
Long-sleeved shirt with layered look
Just fold up the sleeves of the short "over shirt"
Cut off the sleeves of the mock "undershirt" where the two join, being careful not to cut into the material of the overshirt.