Paying rent does nothing for your financial situation.
It’s a great time for homeownership. The market is rebounding, interest rates are still low and the benefits are still great.
Chances are, you’re already making a monthly housing payment. If you’re renting, however, those monthly payments aren’t doing much for you. Especially when compared to the benefits of owning a home.
Homeownership Is Freedom!
One of the best arguments for homeownership, in my opinion, is freedom. If I want a midnight blue ceiling in the bathroom, I can paint it. If a structurally unnecessary wall is in my way, I can knock it down. I can throw in a load of laundry whenever I get the itch. Best of all, no one will be placing any notices to enter on my door.
When you rent a place, you can hear the people downstairs open their closet door every. single. time. You can hear the toilet flush above you, giving you just barely enough notice to dive out of the shower stream before scalding hot water scars you for life. You can smell what is cooking across the hall, whether you like it or not.
Sanpete is a large county with plenty of space, so why not spread out and claim your own piece of freedom?
Tax deductions are a frequently touted benefit of homeownership. A few of the items you may be able to deduct are real estate taxes, mortgage interest and mortgage insurance premiums. Renters, of course, are not eligible for these deductions.
It is important to note, however, that these deductions will only make a difference on your tax return if the total of your Schedule A deductions exceed your standard deduction. See your tax specialist for more complete and up-to-date info on tax deductions.
Equity is the portion of your house that you own. It is the difference between the market value of your home and the total of all liens against your property. If you get a great deal on a home, there is a good chance you will have equity from the moment of purchase. Anything that increases the value of your property or decreases what you owe against the property will increase your equity.
Who cares? You do! We all do. You can use the equity to borrow money for upgrades or other purposes. That equity may also make for a nice down payment if it ever comes time to find a new home.
Capital Gains Exclusion
When you move out of an apartment, not much happens. You get your security deposit back, as long as you haven’t damaged the place, and you move on. However, if you sell your house, you could walk away with a little tax-free income.
The final financial break in the homeownership life cycle is an exclusion of capital gains tax. If you sell your primary home, you can exclude up to $500,000 of your profits from taxation.
Here are a few more benefits of becoming a homeowner:
As exciting as it is, buying a home should never be taken lightly. Make sure you understand the home buying process and work with a knowledgeable professional. Have a question or thought? Leave it in the comments.