8 Good Reasons To Buy A Home

Dated: 10/24/2017

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According to balance.com, there are at least 8 good reasons to buy a home!  Here's what they have to say:

By ElizabethWeintraub

Updated June 09, 2016

If you're like most first-time homebuyers, you've probably listened to friends', family's and coworkers' advice,many of whom are encouraging you 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 willappear to you. Here are eight good reasons why you should buy a home.

Pride of Ownership

Pride of ownership is the number onereason why people yearn to own their home. It means you can paint the walls any color you desire, turn up the volume on your CD player, attach permanent fixtures and decorate your home according to your own taste. Home ownership gives you and your family a sense of stability and security. It's making aninvestment in your future.
 

Appreciation

Beyond pride of ownership, it's important to realize another benefit. First, real estate moves in cycles,sometimes up, sometimes down, yet over the years, real estate has consistently appreciated. The Office of Federal Housing Enterprise Oversight tracks themovements of single family home values across the country. Its House Price Index breaksdown the changes by region and metropolitan area. Many people view their home investment as a hedge against inflation.
 

Mortgage Interest Deductions

Home ownership is a superb taxshelter and our tax rates favor homeowners.

Sometimes themortgage interest deduction can overshadow the desire for pride of ownership aswell. As long as your mortgage balance issmaller than the price of your home, mortgage interest is fully deductible on your tax return. Interest is the largest component of your mortgage payment.
 

IRS Publication 530 contains tax information for first-time home buyers.

Realestate property taxes paid for a first homeand a vacation home are fully deductible for income tax purposes. In California, the passage of Proposition 13 in 1978 established the amountof assessed value after property changes hands and limited property tax increases to 2% per year or the rate ofinflation, whichever is less.
 

Capital Gain Exclusion

As long as you have lived inyour home for two of the past five years, you can exclude up to $250,000 for anindividual or $500,000 for a married couple of profit from capital gains. Youdo not have to buy a replacement home or move up. There is no age restriction,and the "over-55" rule does not apply. You can exclude the abovethresholds from taxes every 24 months, which means you could sell every twoyears and pocket your profit--subject to limitation--free from taxation.


Property Tax Deductions

IRS Publication 530 contains tax information for first-time home buyers.

Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. In California, the passage of Proposition 13 in 1978 established the amount of assessed value after property changes hands and limited property tax increases to 2% per year or the rate of inflation, whichever is less.


Preferential Tax Treatment

If you receive more profit thanthe allowable exclusion upon sale of your home, that profit will beconsidered a capital asset as long as you owned your home for more than oneyear. Capital assets receive preferential tax treatment. This means even ifyour profit exceeds the exclusion, the taxable portion will be much less thanyou might imagine.


 

Mortgage Reduction Builds Equity

Each month, part of yourmonthly payment is applied to the principal balance of your loan, which reduces your obligation. The way amortization works, the principal portion of your principal and interest payment increasesslightly every month. It is lowest on your first payment and highest on your last payment. On average, each $100,000 of a mortgage will reduce in balancethe first year by about $500 in principal, bringing that balance at the end ofyour first 12 months to $99,500.


Equity Loans

Consumers who carry credit cardbalances cannot deduct the interest paid, which can cost as much as 18% to 22%.Equity loan interest is often much less and it is deductible. For many homeowners, it makes sense to pay off this kind of debt with a home equityloan. Consumers can borrow against a home's equity for a variety ofreasons such as home improvement, college, medical or starting a new business.


 


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