Pros of Home Ownership
Home Ownership is One of the Smartest Investments You Can Make
1. Tax Benefits
One of the biggest tax benefits of owning a home is imputed rental income, which a lot of home owners don't even know exists. Imputed rent is how much you would charge per month to rent out your home. If you were renting it out to someone else, you would have to pay income tax on the amount they pay, but since you are living there and effectively "paying yourself" the rent, that income isn't taxed even though you are technically making an investment. The U.S. Tax Code also lets you deduct the interest you pay on your mortgage. This allows you to reduce your taxable income by the amount of interest you paid on your mortgage throughout the year, up to $750,000.
♦1st time home buyers, you can find this info on your 1098-INT form or by logging into your mortgage company.
Equity is the amount of the principal of your housing loan that you have paid off, and is therefore the amount of the home that you own. Early payments on long term mortgages start out mostly paying off interest, and throughout the term of the loan begin to put more and more towards the principal of the loan, but you can build equity faster by putting a bigger down payment when you first buy a house or by making extra payments strictly towards principal. Once you have enough equity built up you can take loans out against it if there is an emergency that requires you to have a lot of money on hand on short notice.
Capital gain is the profit made from selling a property or an investment. Exemptions on capital gain are available if you have owned the house for at least two years, have lived in the house as your primary residence for a total of at least two years, and have not used a capital gains exemption in the last two years. The cap on the exemption is based on your filing status, if you are single the cap is $250,000, but for married couples it is $500,000.
♦1st time home owners, for more information on how to qualify for exemptions on capital gains tax, click here.
With a fixed-rate mortgage you have a monthly payment set in stone for the entire length of your loan, whereas with rent your payment can increase over time until you have a drastically different payment than what you started with.
♦1st time home owners, your insurance is paid each year is in the month you purchased the home, so do some research a month or two ahead of time to see if there is another company you can switch to with a better rate. You can also have inspections done to see where you can make improvements to the home to get the wind mitigation discount (possibly by just adding a few nails to the brackets on your roof) as well as other discounts.
When you own your own home you can decorate it however you like, choose to renovate or remodel any rooms that you want to, and even change the floor plan by adding extra rooms or a whole new floor depending on how much extra space you want.
♦1st time home buyers: some exterior freedoms may not be available if you have an HOA - make sure you check and agree with their restrictions prior to buying in HOA neighborhoods, as their restrictions vary.
|ALTAMONTE SPRINGS||KISSIMMEE, FL||SANFORD, FL|
|APOPKA, FL||LAKE MARY, FL||TITUSVILLE, FL|
|CASSELBERRY, FL||LONGWOOD, FL||WINTER GARDEN, FL|
|DEBARY, FL||MAITLAND, FL||WINTER PARK, FL|
|DELTONA, FL||ORANGE CITY, FL||WINTER SPRINGS, FL|
|HEATHROW, FL||ORLANDO, FL|
Taxpolicycenter.org: What are the tax benefits of homeownership? <https://www.taxpolicycenter.org/briefing-book/what-are-tax-benefits-homeownership>
Cityobserver.org: Such a deal <https://cityobservatory.org/such-a-deal/>
Medium.com: Imputed rents: forgotten but not gone <https://medium.com/@danielbentley1980/imputed-rents-forgotten-but-not-gone-7a6b2f6f0fbb>
Homelight.com: How Much Equity Do You Need to Build Before Selling the House? <https://www.homelight.com/blog/what-is-home-equity/>
Bankrate.com: How to avoid paying capital gains tax when selling your home <https://www.bankrate.com/finance/taxes/capital-gains-and-your-home-sale-1.aspx>