There’s no place like home...There's no place like home! Now click your heels two times :-)
The financial benefits of home ownership are evident year round, but particularly around tax time. What else does owning offer buyers? Well according to Forbes...home ownership offers a few important benefits that will hopefully have you headed to owning your next home. Let's examine!
1. Buying Builds Wealth
OWN IT! Our parents knew it, and our grandparents agreed, but this past decade of real estate turbulence has shaken everyone’s confidence in home ownership. However even in a ‘new market’ home ownership can be a very savvy financial move and create long-term stability for families – but only if people buy homes they can actually AFFORD.
2. Build Equity Every Month
Simply put...equity is the difference between what you owe and what your home is worth/what you paid. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. With every mortgage payment your equity increases. The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. Thus, as the months and years go by, your equity grows!
3. Tax Deduction Benefits
Mortgage deduction: The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people this is a huge deduction, since interest payments can be the largest component of your mortgage payment in the early years of owning a home.
Some closing cost deductions: The first year you buy your home, you are able to claim the points (also called origination fees) on your loan, no matter whether they are paid by you or the seller. And because origination fees of 1 percent or more are common, the savings are considerable.
Property tax is deductible: Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.
4. Tax Deductions on Home Equity Lines
In addition to your mortgage interest, you can deduct the interest you pay on a home equity loan (or line of credit). This allows you to shift your credit card debts to your home equity loan, pay a lower interest rate than credit card interest rates, and get a deduction on the interest as well.
5. Get a Capital Gains Exclusion
If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. Now, it may sound ridiculous that your house could be worth more than when you purchased it after these past several years of falling house prices. However, if you purchased your home anytime prior to 2003, chances are it has appreciated in value and this tax benefit will come in very handy.
6. Long Term, Buying Is Cheaper than Renting
Over time, as the interest portion of your mortgage payment decreases, the interest that you pay will eventually be lower than the rent you would have been paying. More importantly, you are not throwing away money in rent to pay off your landlord's mortgage. If you must pay to live somewhere...pay for your OWN!
For more information on the home buying process contact The Mark Quinichett Group TODAY!
Start your home search HERE!!!