Tax Advantages of Home Ownership
The US government allows tax incentives that make it possible for many homeowners to exceed the standard yearly deduction. Your state may offer the same benefits.
- A tax deduction for the yearly interest on your primary and vacation home. This amount equals a big chunk of your total payments for the first several years.
- You can deduct the total amount of your yearly property tax bill.
- If you refinance to consolidate other debts, the interest on the home equity loan is tax deductible.
Homeowners Have More Stable Costs of Living
- Monthly payments can change if property taxes and insurance go up, but increases usually happen gradually.
- Rental fees can sometimes be more unpredictable.
Appreciation of Your Investment
No one can make any guarantees, but over time most real estate increases in value. If you are careful about your selection, and you treat the home kindly, it will likely be worth considerably more in five years than it was the day you bought it.
Your initial investment may be as little as 3% (or less) of the home's sales price, but you are the one who benefits from appreciation of the property. Not the bank, not the landlord. You.
Your Equity Grows Each Month
Even though interest makes up a good portion of your monthly payment, especially during the first years, the amount paid toward the principal increases each month.
Appreciation and equity work together, helping you use your initial investment to move into a home with more features if that's what you wish to do.
You Are In Control
The house is yours. You are the only one with the power to allow anyone to enter the house to inspect it. Paint it and decorate it in any way you wish. Put nails in the walls to hang pictures and artwork. Bring home a pet without asking anyone if it's allowed. It belongs to you.
More Reasons
You've probably seen lots of financial arguments about why you should own your own home rather than rent. These include being able to budget (no rent increases) and the tax savings you'll most likely have. Now we're going to give you some reasons you probably haven't heard:
- Freedom to pursue other goals in life once the major goal of home ownership is achieved Strange as it sounds, many of my first-time buyers have told me that once they bought the house, other things in their life started to fall into place. It's as if not owning took so much of their mental energy that other goals were not worked on until that big goal was reached. So buy a home and get on with your life!
- A greater sense of belonging to the community
Once you own a home, you feel more attached to the city in which you live. You're more interested in what happens in town, to the roads, schools, and shopping areas. Some people even become involved in local politics, which you seldom see a renter do.
- A commitment to something, a sense of stability
Home ownership is an anchor, something that cannot be pulled out from under you. You'll never get a notice that you have to move. You're kids will never have to change schools. It gives you freedom to plan years ahead.
- You can change things, a feeling of being in control
It's your home. You can add to it, remodel it, change the landscaping, do whatever projects you want. You have a feeling of being in control of something in your life. At work we don't always have control of what happens, but your home is your castle that you have dominion over. You can see what you're building take shape before your eyes.
- More control over the children than in an apartment complex
In a neighborhood, kids usually play in the yards or go to friend's houses a few doors away. My clients have told me that in an apartment complex they never knew where the kids were. They could be in any of hundreds of apartments, doing who knows what. In a home you get to know the neighbors and watch out for each other's kids. Children do better in school and feel more secure This one surprised me, but buyers have reported to me that their kids calmed down in school after they bought a house. I don't know why, but it seems to work that way. I remember a single mom watching her son play in the yard, making steps in the slope and building things. She didn't have to tell him to leave everything alone, like she did at the apartment complex. I guess kids feel the same need for control we adults do.
- Time and money saved by not going to the laundromat A small point, but if you have kids, you know the value of this one. You gain a whole evening a week when you buy a house! The wash gets done in between other things, or while you're at work. What would you do with the extra evening you'll have? How about going out for dessert with your spouse with all those quarters.
