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|Why Purchase a Home?|
1. Mortgage Interest Tax Deductions
You can deduct the interest you pay on your mortgage from your taxable income. This is one of the greatest benefits of purchasing rather than renting. The value of this tax break depends on factors like your personal tax bracket, the size of your mortgage, the rate of interest you pay on it and how long you’ve held the mortgage. As a general rule, the newer the mortgage, the greater the amount of interest you pay each month and the bigger the tax break. Therefore, recent buyers with young mortgages tend to get the greatest benefit.
2. Home Value Appreciation
Historically, home prices go up over time. So if you buy a home now, you’ve put your capital in a safe investment where it is likely to grow.
3. Pride of Ownership
Unlike renting a home or apartment, you can paint rooms and make improvements and upgrades that will likely result in increasing the value of your property. Not only that, but you can take PRIDE in knowing that you have improved your way of life-customizing your home to your likes.
4. Home Equity Loans
You can access the paid-up equity you accumulate in your home in the form of a home equity loan or a home equity line of credit (also known as a HELOC). Since a HELOC is secured, home equity loans and lines of credit generally carry a lower interest rate than other types of consumer loans, such as auto loans. As an added benefit, the interest on a HELOC is generally tax-deductible.
5. Capital Gain Exclusion
As a homeowner, if you have lived in your home for at least 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 for capital gains. You may exclude the above thresholds from taxes every 24 months. This can be profitable for you. A trusted accountant can answer these questions effectively.
6. Preferential Tax Treatment
If you receive more profit from equity growth 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 do receive preferential tax treatment.
7. Interest Rates Remain Historically Low
This makes it relatively inexpensive to take out a mortgage. With low rates, you can afford to buy more house for your money. While rates remain very low (compared to 14%-18% interest rates in the 1980s), it will not stay this way forever. Check out our mortgage loan calculator to figure payments and affordability.
8. A Greater Opportunity for Community Involvement
As a homeowner, you will be able to have a stronger voice in community affairs. Many neighborhoods have a Home Owner’s Association (HOA). This includes most condos, lofts & townhomes. Many neighborhoods with single family homes built since 1970 have HOA’s. Monthly meetings are a great way to introduce yourself and get involved with neighborhood and city-wide issues. If you live in a neighborhood without an HOA sometimes there are community or citizen’s groups where your voice can be heard.
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