The 6 Financial Benefits of Homeownership

Tax Forms

If you believe there is “no place like home,” you are likely among the 68% of Americans who have decided to eschew renting and own their home outright. Homeownership is about much more than having a place to hang your hat and feeling free to make decorating decisions without having your landlord sign off on them, it can make a lot of financial sense too. Without further adieu, here are six financial benefits of homeownership.

Homeownership builds wealth.

Despite the past decade or so of turbulence in the real estate market, home ownership can be a very savvy financial move – but only if people buy homes they can actually afford. Living within your means and buying within your means is a very savvy financial move that allows you to gradually build wealth in your home.

You build equity every month.

Simply put, equity in your home is the amount of money you can sell it for minus what you still owe on it. Every month, you make a mortgage payment that reduces what you owe on your home. Reduction of your mortgage increases your equity. That is especially true now with the elimination of risky mortgages like negative amortized and interest-only loans – thanks to the new “qualified mortgage” rules. Be smart when you risk your money.

Mortgage tax deduction benefits.

The tax code allows homeowners to deduct the mortgage interest from their tax obligations. The first year you buy your home, you are able to claim origination fees on your loan, no matter whether they are paid by you or the seller. Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.

You get 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 move credit card debt with high interest rates to a line of credit and get a deduction as well.

You get a Capital Gains Exclusion.

Live in your new home for at least 2 years qualifies you for this exclusion. 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 if you bought wisely and your home increases in value.

Long Term, Buying is better than Renting.

You have to live somewhere, so instead of paying a landlord to pay off their mortgage, it’s often wiser to own a home and pay off your mortgage while building equity for yourself.

Real estate activity will always be crucial to our nation’s economy, which means our government will always provide tax incentives to help consumers purchase and own real estate. Prospective and current homeowners should take time to learn about these tax deductions to make sure they are taking advantage of all the financial benefits of homeownership. From tax benefits to good, old-fashioned financial stability, homeownership is the way to go!

The realty team at Lakeside Real Estate Group has offered unsurpassed service to both buyers and sellers in the Tellico Village area for over 25 years. Reach out to us today and let’s talk about the many more reasons homeownership may be right for you.

Editor’s note: This blog was originally posted in 2016, but has been updated for timeliness and accuracy.

Tagged With: , , | Posted: January 15, 2018