Owning a home has many financial benefits and these tend to become especially evident during tax season. From financial stability to tax benefits, owning a home is not a bad thing at all. Let’s have a look at exactly what the benefits are:
Owning a home is financially savvy
Recent turbulence in the real estate market has made people unsure about owning a home. However, it is still a smart thing to do if you do it right. Buying a house that you can afford will build wealth over time and make homeownership worth it.
Your monthly payments build your equity
Your home equity is determined by the amount that you can sell it for minus the amount that you still owe on it. This means, that every month when you pay your mortgage you are increasing your equity.
You get tax deduction benefits
There are different tax deduction benefits that you may qualify for. These include tax deduction that allows homeowners to deduct mortgage interest; property tax deductions; and closing cost deductions for the first year you buy your home.
You could qualify for capital gains exclusion
To qualify, you need have bought a house with the main purpose to live in it and have done so for at least two years. If you bought your house before 2003, chances are that it has gained value and not lost value. Based on all this, you could walk away with a profit of between $250 000 and $500 000 when you sell your house and you will not owe capital gains taxes.
Buying is cheaper in the long run
Buying a house may be costly in the beginning, but compared to renting for the same amount of time and monthly payments, buying is definitely cheaper in the long run. Instead of paying off someone else’s mortgage, you may as well rather pay your own.
Buying a home is a sound financial decision as long as you plan for it and can afford it. Don’t buy over the amount that you can comfortably afford and you will be fine and can enjoy your home.