I believe that most people have an innate desire deep down inside to own their own home. Yes, circumstances like your job or finances could put this on hold for now, but buying a home is on the majority’s “to do” list.
Benefits of Owning a Home
Also, I believe that many already know of some of the major benefits to owning a home but here are a few that you may have not thought of or considered.
One of greatest breaks that you’ll get on paying taxes will come from owning a home and they got a little better not too long ago.
For most of us (about 70%), we will need to get a mortgage when we buy a house. Well, there’s good news! A married couple filing jointly or an individual may write off their mortgage interest on loans up to $700,000. If a married couple is filing separate, the limit is $375,000. You can also deduct any points that you purchase to pay down the rate.
An individual or married couple filing jointly will also be able to deduct up to $10,000 of their property taxes each year. For a married couple filing separate, the limit is $5,000. Where I live and sell real estate in lower Alabama, property taxes are some of the lowest in the country but it is nice to know that you can even deduct that amount on your taxes.
There is also a “Standard Deduction” that covers everyone. Here are the standard amounts:
- Single home owner – $12,000
- Married couple filing separate – $12,000
- Head of household – $18,000
- Married couple filing jointly – $24,000
Plus, (and here’s a big one) you get to enjoy tax free capital gains when you sell your home with profits up to $250,000 for a single owner and up to $500,000 for a married couple. The only requirement is that you must have lived in the home as a primary residence for 2 of the last 5 years.
The real estate industry is cyclical – there are highs and lows. This is where someone usually says that we don’t have a crystal ball. However, for the long term home owner, history tells us that your home will appreciate and be worth more over time. Depending on your area and demand, home appreciation (or depreciation) can occur in a short amount of time.
There are so many factors that effect appreciation like the national economy, jobs, wages, and so on. But, by keeping an eye on current economic matters in the country as well as your town, you should be able to somewhat, “see the future”.
I often tell home buyers to consider purchasing if they plan on staying in the home for at least 3-4 years. Areas that show a slow and steady growth annually are usually a good place to buy a home because it shows stability.
Other what’s in your “one year” contract if you’re renting a home, there’s no guarantee that your rent won’t go up in the future. This could absolutely create some anxiety for a lot of folks.
If you’re buying a home, getting a mortgage, and part of the 96% of borrowers in the country, you will be getting a fixed rate mortgage. This means that your mortgage payment will be the same today as it will be 30 years from now or as long as you have the loan. Now that’s peace of mind. Yes, your property taxes and insurance could increase but if you have a fixed rate mortgage, your interest rate and premium will remain the same year after year.
Being able to predict what you have to pay in the future for your house is one of the biggest differences between renting and owning your home.
Every month that you make a house payment, you’re putting money away into a type of savings account. If you go with historical facts, your home will increase in value over the years so bi-proxy, when you sell, you will receive a nice paycheck at the closing table.
Better yet, you won’t have to pay any capital gains to the federal government on that money up to $250k or $500k.
As a renter, you’re a building your landlord’s savings account. It’s as simple as that. Do you want to build your own financial future or someone else’s?
People love to make their homes their own but if they rent, there are obvious limitations since the they don’t really have a say in what can be done with the house.
Whether it’s choosing the trendy wall color that you’re seeing in all the magazines or wanting to knock down a wall to open up the space, renters aren’t really allowed to make any changes to the home without permission.
As a home owner, you have all the freedom in the world to create a living space that is perfect for you. If you want a privacy fence, you can have one installed. If you prefer handicapped toilets, go for it. The only things I can think of that would reduce your freedom as a home owner would come from your municipality or the home owner’s association. So, you probably can’t have a llama farm in your backyard. However, here again, you have the “freedom” to buy a house in an area that would allow a llama farm.
Stability is especially important if you have kids. By living in the same area for several years or longer, you get the chance to build long lasting relationships with the people around you. Also, your consistent existence over a long period of time in an area will help bring structure socially and in education.
How often have you heard that the kids were freaking out because they had to leave all their friends at school because they had to move?
There are so many joys and benefits to owning your own home and to many it’s the fulfillment of reaching the American dream.
Additional Resources for Owning a Home:
- Should I Buy Or Rent a Home? – Find clear advantages and disadvantages for both buying a home and renting one from Paul Sian.
- Benefits of Owning a Home – Kyle Hiscock goes into even greater detail on the advantages of owning a home.
- Tax Advantages of Owning a Home – Here, Bill Gassett explains in great detail about all the tax advantages of home ownership including mortgage interest, points, insurance, and capital gains.
- Your Home May Be Less of an Asset Than You’re Led to Believe – Conor MacEvilly reminds us that real estate markets aren’t always great and that your home is so much more than just an investment.