new2.jpg)
Appreciation
Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated. Many people view their home investment as a hedge against inflation. It is hard to see past the economy and home prices sometimes but hold on to the home long enough and it will pay appreciate in the long run. Just remember "Location, Location, Location"Pride of Ownership
Pride of ownership is the number one reason why people yearn to own their home. It means you can paint the walls any color you desire, turn up the volume on your CD player, attach permanent fixtures and decorate your home according to your own taste. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.Mortgage Interest Deductions
Home ownership is a superb tax shelter and our tax rates favor homeowners. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is the largest component of your mortgage payment.Property Tax Deductions
IRS Publication 530 contains tax information for first-time home buyers. Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. We all love deductions!Capital Gain Exclusion
As long as you have lived in your home for two of the past five years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains. You do not have to buy a replacement home or move up. There is no age restriction, and the "over-55" rule does not apply. You can exclude the above thresholds from taxes every 24 months, which means you could sell every two years and pocket your profit--subject to limitation--free from taxation.Preferential Tax Treatment
If you receive more profit than the allowable exclusion upon sale of your home, that profit will be considered a capital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment.Morgage Reduction Builds Equity
Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation. The way amortization works, the principal portion of your principal and interest payment increases slightly every month. It is lowest on your first payment and highest on your last payment. On average, each $100,000 of a mortgage will reduce in balance the first year by about $500 in principal, bringing that balance at the end of your first 12 months to $99,500.Equity Loans
Consumers who carry credit card balances cannot deduct the interest paid, which can cost as much as 18% to 22%. Equity loan interest is often much less and it is deductible. For many home owners, it makes sense to pay off this kind of debt with a home equity loan. Consumers can borrow against a home's equity for a variety of reasons such as home improvement, college, medical or starting a new business. Some state laws restrict home equity loans.Storage space: When you rent an apartment or condo, the only storage space you’re likely to have is whatever closet space is in the unit. Some apartments have supplemental storage, but you can’t count on it, and where it does exist, the storage conditions may be poor (a basement prone to flooding) and the security may be minimal (a wire cage with a padlock). When you own a house, not only is it probably going to be bigger than the place you were renting (600-square-foot apartments are a lot more common than 600-square-foot houses), automatically giving you more room for your stuff, but you can also put things in the attic, the garage, and the backyard. You can even buy a shed for your backyard to create additional storage space if you exhaust your other options.
Neighborhood quietness: As a homeowner, there are fewer people living on my entire block than there were in my former apartment building (which was also surrounded by other similarly high-density dwellings). Setting aside the obvious benefit of no longer sharing your walls, floors, or ceilings with neighbors when you own a house, with fewer people around, period, you generally get less noise. Of course, to accomplish this, you’ll have to buy a house in an area that is zoned only for single-family residential.
Pet options: Renting severely restricts your options for pet ownership. Either you can’t have one at all, it can only be a certain type, it has to be under a certain weight, you can only have one, you have to pay an extra deposit for it, or you have to pay a monthly “pet rent” for it. When you own a house, not only do you have near complete control of your property, you also have more space for animals to roam. The only restrictions on pet ownership you’ll face as a homeowner relate to city ordinances and your neighborhood norms (so if it’s your dream to raise chickens, do the research before you buy). And, unlike moving from one apartment to another, where finding a pet-friendly place is always a hassle, an owner-occupied house is almost always pet-friendly.
Control over repairs: When you live in someone else’s property, you’re at their mercy as to when repairs get completed. If this Friday is a bad day to have your toilet fixed because it’s your first vacation day in six months and you don’t want to wake up at 8:00 to deal with a plumber, your landlord probably doesn’t care. But if it’s your house, you can schedule the repair for a time that’s convenient for you. You also have the option of having someone else redo the repair if the first repairman botches the job, whereas in an apartment, your dishwasher will probably be spraying water all over your counter for as long as you live there if the building owner’s usual maintenance crew can’t fix it.
A short walk to the washing machine: Unless you live in a luxury apartment, doing laundry probably involves trudging your heavy laundry bag and detergent down at least one flight of stairs only to find out that all the washing machines are occupied. When you own a house, your washing machine will always be available — no more doing five loads of laundry at 9:00 on a Tuesday night. And no more hunting in the couch cushions for quarters or worrying about people stealing your clothes and having strangers see your underwear (unless you want them to, of course). You’ll also have the option of line-drying your clothes outdoors in the backyard, which is good for both the environment and your wallet. Many rental agreements prohibit fresh-air clothes drying, considering it to be “low-class” or “an eyesore.”
Fewer noise complaints from the neighbors: Need to assemble 10 bookcases from Ikea in a single afternoon? No problem. Do all the hammering in your house with the doors and windows closed and no one else is likely to hear it. But even if you do it outside, the neighbors probably won’t complain — after all, there are days when they need to make loud home improvements, too, and they’ll want you to return the favor of not minding their noise.
Not having to move: As long as you pay your taxes and your mortgage (and eminent domain doesn’t rear its ugly head), no one will ever tape a note to your door telling you that you have to move. What’s more, if your needs change, you won’t necessarily have to move when you own the place where you live. Instead, you can adapt it to suit you. You can add on another bedroom, screen in the patio, or turn the garage into a gym. There’s a certain sense of peace that comes with knowing you can lay your head in the same spot every night for as long as you want.
The freedom to choose: In an apartment, you might only have one option for extra television channels, and it’s probably cable. When you own a house, you’re limited only by the service providers that serve your area — not by restrictions on modifying the building. If you want to install a satellite dish or a special box on the exterior of your house, you probably can. Your phone service options might also improve in a house. For example, an apartment might necessitate a land line if you want the ability to buzz in friends and takeout delivery people from your fourth-floor abode, but in a house, you might be able to rely entirely on Internet-based phone service, which generally provides more calling options for less money.
Don’t underestimate the benefits of owning a house — they’re more than just financial. In fact, even when owning a house isn’t better for your bank account than renting, you may find that the emotional and lifestyle benefits are worth it.
