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Benefits of Home
Ownership
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Owning a home is the American
dream, providing the home owner with personal satisfaction and financial
advantages. While you enjoy the
freedom of owning your own home, you can enjoy tax breaks by writing off
interest to the possible appreciation of the home’s equity.
Benefits of home ownership include:
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| Tax
breaks.
Homeowners may deduct mortgage interest and property taxes as an expense
against income, while residential investors may write off cost
recovery or depreciation.
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Gains. Between 1998 and 2002, national
home prices increased at an average of 5.4 percent annually. And
while there’s no guarantee of appreciation, a 2001 study by the
NATIONAL ASSOCIATION OF REALTORS®
found that a typical homeowner has approximately $50,000 of
unrealized gain in a home. |
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| Appreciation:
Real estate values generally tend to rise over a period of years.
Many home owners can buy a home for what they use to pay in rent.
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Equity. Money paid for rent is money that
you’ll never see again, but mortgage payments let you build equity
ownership interest in your home.
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Savings. Building equity in your home is a
ready-made savings plan. And when you sell, you can generally take
up to $250,000 ($500,000 for a married couple) as gain without owing
any federal income tax.
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Predictability. Unlike rent, your
mortgage payments don’t go up over the years so your housing costs
may actually decline as you own the home longer. However, keep in
mind that property taxes and insurance costs will rise.
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Freedom. The home is yours. You can
decorate any way you want and be able to benefit from your
investment for as long as you own the home.
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Stability. Remaining in one neighborhood
for several years gives you a chance to participate in community
activities, lets you and your family establish lasting friendships,
and offers your children the benefit of educational continuity.
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| Marketable title:
Real estate can be sold at a predicable price to a dependable group
of
available buyers with time and exposure.
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| Tangible Asset:
Home owners benefit from the low initial investment (down payment)
on
a high-value asset (their home).
Many lenders see real estate as a low risk,
durable and marketable asset and are willing to loan a high
percentage of the home’s value.
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| Intangible Asset: Home owners
benefit from a deep sense of security and pride. Home owners can
make improvements to the home, which add convenience
and
may add value over a period of years.
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