Home ownership helps you save money, build wealth, and pay fewer taxes. Here’s how:
You build future wealth. Over time, home ownership is a great way to become wealthier. Today’s a new market. Interest rates are low, home prices are affordable, and homes are once again appreciating instead of losing value.
You increase home equity. Home equity is the difference between your home’s value and how much you owe on your home. Every monthly mortgage payment you make reduces the amount you owe and increases your equity.
You enjoy homeowner tax benefits. Tax deductions include:
- Mortgage interest: Homeowners may deduct mortgage interest on their tax returns. This is a big deduction, especially in the beginning years of owning a home.
- Closing costs: When you first buy a home, some closing expenses are deductible. You can claim origination fees and interest points to reduce the amount of taxes you owe.
- Property tax: Real estate taxes on your primary residence (and a vacation home) that you pay each year are fully deductible every year.
You can receive tax deductions on home equity loans. Interest on a home equity loan is deductible. This allows you to pay a much lower interest rate on money that you might need to borrow.
You can reap tax-free profits when you sell. If you buy a home and live in it for more than two years, when you sell, you qualify for a capital gains exclusion (up to $250,000 if you’re single or $500,000 if married) and not owe any capital gains taxes.
You will be forced to save money. Think of paying a mortgage as a monthly savings plan. As your home equity increases, it will be similar to saving money.
Down the road, buying is cheaper than renting. When you look at buying vs. renting, in the short-term, it’s probably cheaper to rent. However, as years go by, and as rents go up and your mortgage payment stays about the same, buying is cheaper than renting.
Want to know about great buying opportunities in Bluffton? Call your real estate agent. Want more information about tax deductions for homeowners? Call your accountant.
Larry Stoller is a real estate consultant and advertising executive who loves living in Bluffton and helping real estate agents and sellers get homes sold.