The Many Benefits of Home Ownership
Owning a home can bring financial rewards as well as
a personal satisfaction that comes with knowing that you have
a piece of the American
dream. The financial benefits of homeownership range
from the tax breaks that theowner can enjoy by writing off
interest to
the possible appreciation in the equity of the home over
time. To understand the full extent of possible tax benefits,
it is
strongly suggested that you contact your local IRS agent
or speak with an accountant about your particular situation.
Some of the
financial benefits 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, while residential
investors may write off cost recovery or depreciation.
Being a tangible asset, real estate is seen by lenders as low
risk, durable and marketable. Therefore, lenders are more willing
to loan a high percentage of value. This allows owners to benefit
by having control over an entire high-value asset with a low
initial investment or down payment.
Real estate is marketable - it can be sold at a predicable
price to a dependable group of available buyers, provided enough
time is allowed to expose the property to those buyers.
Real estate provides its owner with valuable control and management
of its value.
The personal benefits are less easy to translate into a specific
list, but are in many cases equally compelling as a reason
to buy. The following is a list of common motivations that
inspire people to own their own homes.
Owning my own home provides me with a deep sense of
security. I need to own in order to feel that I have roots
and really
belong to my community. ·
I can make my own decisions about design and decor. ·
I can invest in upgrades 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 a person should rent or buy.
There are many factors that influence this decision such as
how long a person intends to stay at one certain address. If
there is a possibility that occupancy will last only a year
or two, then it is probably advisable to rent unless you are
willing to lease the property out as a rental once you move
on. The only time it makes sense to buy with the intention
of a quick turn around is if the property purchased was under-valued
or if the real estate market is appreciating so rapidly that
the increase in equity will exceed the cost of selling the
property.
Another approach is to buy the property and lease it to tenants
when it comes time for you to move on. This makes sense only
if you can rent the property at a level that will cover your
mortgage payment. You must also be certain that you will have
the time and patience to act as a landlord. And finally, be
sure to assess what the impact of holding onto the property
will be on your financial statement. It is possible that by
holding onto the first property to rent, you will not qualify
to take a mortgage on a second property.
The decision to buy has as much to do with your personal needs
as it does to do with the financial reasons that can motivate
a buyer. Do the math to understand the monetary ramifications.
Take time to understand your own motivations before you rush
into this decision. Homeownership has its definite rewards.
Pursue them with wisdom!
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