Why Purchase a Home?
If you're like most first-time home buyers, you've probably been told by friends, family or co-workers that you need to buy a home. However, you may still wonder if buying a home is the right thing to do. Relax. Having reservations is normal. The more you know about why you should buy a home, the less scary the entire process will appear to you. Here are some good reasons why you should buy a home.
PRIDE OF OWNERSHIP - This is the #1 reason why people yearn to own their own home. Homeownership gives you and your family a sense of stability and security.
APPRECIATION - Although real estate moves in cycles, sometimes up, sometimes down, over the years real estate has consistently appreciated. Many people view their home as a hedge against inflation.
MORTGAGE INTEREST DEDUCTIONS - As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is the largest component of your mortgage payment.
PROPERTY TAX DEDUCTIONS - Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes.
CAPITAL GAIN EXCLUSION - As long as you have lived in your home for 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 can exclude every 24 months which means you could sell every two years and pocket your profit-subject to limitation-free from taxation.
PREFERENTIAL TAX TREATMENT - If you receive more profit than the allowable exclusion upon the sale of your home, that profit will be considered a cxapital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment.
MORTGAGE REDUCTION BUILDS EQUITY - Each month, part of your payment is applied to the principle balance of your loan, which reduces your obligation and as your mortgage balance goes down, your equity goes up.
EQUITY LOANS - Consumers can borrow against a home's equity for a variety of reasons such as home improvement, college, medical and business start up.
