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benefits of home ownership
Owning a home brings financial rewards as well as personal satisfaction. The financial benefits of homeownership range from tax breaks that the owner can enjoy by writing off interest to the possible appreciation in the equity of the home over time. To understand the extent of the possible tax benefits you should consult your tax advisor.
Some of the financial benefits of home ownership include:
Appreciation - Real estate values generally rise over a period of years.
Tax advantages - Homeowners may deduct mortgage interest and property taxes as an expense against income. Residential investors may write off cost recovery depreciation.
Being a tangible asset, real estate is seen by lenders as low risk, durable and marketable.
Real estate is marketable - it can be sold at a predictable price to a dependable group of available buyers, providing enough time is allowed to expose the property to those buyers.
Personal benefits are less specific but equally compelling. Common motives that inspire people to buy their own homes are:
Owning my own home provides me with a deep sense of security. I need to own my home in order to feel that I have roots and really belong in my community.
I can make my own decisions about design and décor.
I can invest in upgrades and improvements that will not only bring me pleasure but can also add to the value of the property over time.
I have control over the piece of property. I am not answering to a landlord
Usually the question is whether to rent or to buy. How long you are going to stay in the property is an important factor in that decision. If you plan to move on after a year or two renting may be the best option for you, UNLESS you are willing to make the property into a rental. The only time it makes sense to buy with the intent to do a quick turn around is if the property purchased was under valued or if the real estate market has appreciated so rapidly that the increase in equity will exceed the cost of selling the property.
If you do decide to rent to tenants, when it comes time to move on, make sure the rent will cover your mortgage payment and you have the time and patience to act as a landlord. You also need to consider the financial ramifications of holding on to the first property when you need to qualify for a mortgage on a second property.
Your realtor can discuss all of these issues and concerns with you and help you come to the right decision for your situation. |
