Seven reasons to own a home

There are many advantages to owning a home rather than renting one or renting an apartment. We will discuss them here:

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes as well as some of the costs involved in buying your home. The tax deductions you’re eligible to take for mortgage interest and property taxes greatly increase the financial benefits of homeownership. Note: Check IRA Publication 936: Home Mortgage Interest Deduction for details.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, real estate remains a good long-term investment. However, the true return on a home investment should not be based simply on home appreciation, but also the amount leveraged. Homebuyers typically use their own money to cover only 5 to 20 percent of the purchase price of a home, yet the home appreciation they realize is based on the total value. In other words, homeownership is a leveraged buy-in.

3. 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.

4. 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 filing jointly) as gain without owing any federal income tax. You must meet both the ownership test and the use test. See IRA Publication 523, Topic No. 409, which covers general capital gain and loss information and all the eligibility requirements, limitations and exceptions.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise 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 might increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. 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.

This article was provided by the Warren Area Board of Realtors. Contact your local Realtor for a list of homes or visit www.wabor.org for a list of Warren Area Board of Realtors members.