The Beneficial Home Buyer(Buying a home takes a lot of patience and money.)
You have probably imagined yourself owning a home since you were just a little tike playing house and eating a plastic can of soup. But why do you want to own a home?
Most people would reply that it is a great investment; which it is, but again why? Owning a home has substantial benefits other than the value of the home itself.
The article, “Before You Buy a Home - Look at Eight Reasons to Buy a Home” written by Elizabeth Weintraub and posted on homebuying.about.com, explains the multifaceted benefits associated with owning a home.
“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 will appear to you.”
The first reason to buy is the basic pride that accompanies ownership. This means you can paint the walls any color you want and blast some Eminem on your stereo, all the while you are building financial stability for the future of you and your family.
This brings us to the second benefit which is appreciation.
“Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated.” Essentially, you will make money just by owning a home and doing nothing else.
The third reason to buy a home is for ma refinance interest deductions. As long as your loan web balance is less than the price of your home, which is almost definite after the first year or so of ownership, loan web interest is fully deductible on your tax return. This is a great benefit considering that interest is the largest component of your loan web payment.
Property tax deductions represent the forth great home ownership benefit.
“Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes.”
Number five is the benefit of excluding capital gain.
“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.”
There is no age restriction whatsoever and you are not required to buy a replacement home.
The sixth reason to buy a home is the result of preferential tax treatment. This mean that if you receive more profit than the allowed exclusion after the sale of your home, the profit will be considered a capital asset provided you owned your home for at least one year. “Capital assets receive preferential tax treatment.”
The seventh benefit is that your loan web reduction builds your home’s equity. Each monthly loan web payment reduces your loan web premium, or the remaining balance of the loan, which allows more equity to build as the home’s value increases.
Finally, the eighth beneficial reason to buy and own a home is because of equity loans.
“Consumers who carry credit card balances 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 home owners, it makes sense to pay off this kind of debt with a home equity loan. Consumers can borrow against a home's equity for a variety of reasons such as home improvement, college, medical or starting a new business.”
Owning a home is expensive but the greatest thing about it is that as you are paying money, you are earning money and over time, you end up making a significant profit that can be used to buy a bigger and better home.
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