Bring your rackets! You must see this large, beautifully maintained home that backs to a park with public tennis courts! Aurora's Hutchinson Heights neighborhood is centrally located,
6 Financial Benefits Of Home Ownership This Tax Season
1. Home ownership Builds Wealth Over Time
We were always taught growing up that owning a home is a financially savvy move. Our parents knew it, and their parents knew it. But this past decade of real estate turbulence shook everyone’s confidence in home ownership. However, Home ownership over time has proven to be a stable and very savvy financial move – but only if people buy homes they can actually afford.
2. You Build Equity Every Month
Your equity in your home is the amount of money you can sell it for minus what you still owe on it. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe. That reduction of your mortgage every month increases your equity. The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. Equity building is especially powerful for those people who refinance from a 30 year to a 15 year fixed loan (an especially smart thing to do while interest rates remain low) or choose to pay a little bit more monthly and start with a 15 year fixed mortgage instead of 30. Keep in mind that 15 year mortgages often have interest rates about 1% less than traditional 30 year mortgages, so the savings over the course of a loan can run into the 6 figures.
3. You Reap Mortgage Tax Deduction Benefits
- Mortgage deduction: The mortgage deduction is often the biggest deduction a person has available. The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people this is a huge deduction, since interest payments can be the largest component of your mortgage payment in the early years of owning a home.
- Some closing cost deductions: The first year you buy your home, you are able to claim the points (also called origination fees) on your loan, no matter whether they are paid by you or the seller. And because origination fees of 1 percent or more are common, the savings are considerable.
- Property tax is deductible: Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.
In addition to your mortgage interest, you can deduct the interest you pay on a home equity loan (or line of credit). This allows you to shift your credit card debts to your home equity loan, pay a lower interest rate than the horrendously exorbitant credit card interest rates, and get a deduction on the interest as well.
5. You Get a Capital Gains Exclusion
If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. Now, it may sound ridiculous that your house could be worth more than when you purchased it after these past several years of falling house prices. However, if you purchased your home anytime prior to 2003, chances are it has appreciated in value and some parts of the country are already seeing 10% gains in property values in the past year.
6. Long Term, Buying Is Cheaper than Renting
In the first few years, it may be cheaper to rent. But over time, as the interest portion of your mortgage payment decreases, the interest that you pay will eventually be lower than the rent you would have been paying. In certain markets like Denver, the rental market is so tight, that you with the low mortgage rates, you will pay less right away from buying than what you will on the open market for renting a similar property.
Denver Colorado area real estate -- Darrick Kizlyk -- Realtor at EXIT Realty Denver Tech Center. Darrick Kizlyk is your relocation expert for Denver, Colorado Springs, and the surrounding bedroom communities. Call me for all your sales needs or let me get you into the house of your dreams! Darrick Kizlyk 719-360-3935
With 12 years in public education as a teacher and 3 years as a Realtor, I bring that background to help educate home buyers and sellers along the Front Range from Denver to Colorado Springs and up th....