If you are like most first-time buyers of a house, you may probably be listening to your co-workers’, friends’ and family’s advice, a lot of them are encouraging you to purchase a house. However, you might still wonder if purchasing a house is the best thing that you could do.
Having some reservations is basically normal. As a matter of fact, the more you have the knowledge about why you need to purchase the house, the less scary the whole process will be. The following are some of the good reasons why you need to buy a house of your own:
- Ownership Pride
Ownership Pride is actually the main reason why people desire strongly to have a house of their own. That means that you may paint the walls of any color you want, attach permanent fixtures, decorate you house in accordance to your own preferences and turn up the music of your liking. In short, you can do whatever you want to do in your own property. Home ownership provides you as well as your family with a sense of security and stability. It is making a good investment for your future.
Beyond ownership pride, it is also very essential to realize another advantage. Real estate actually moves in cycles, sometimes down, sometimes up, yet for the past several years, real estate has constantly appreciated.
- Mortgage Interest Deductions
Owning a house is an excellent tax shelter and the taxes rates are in favor of the homeowners. Having said that, oftentimes, the mortgage interest deduction may overshadow the desire for ownership pride. As long as the homeowner’s mortgage balance is lesser than the value of your house, mortgage interest is totally verifiable on the tax return. In addition to that, mortgage interest is the biggest component of a mortgage payment. To know more about it, you can also reach out to a professional who knows how to refinance mortgage.
- Exclusion of the Capital Gain
As long as you’ve lived in your house for 2 of the past 5 years, then you may exclude up to 250,000 dollars for an individual or 500,000 dollars for the married couple. With that being said, you do not need to purchase a replacement house or move up. There’s no restriction to age and the rule for over 55 years old doesn’t apply at all. You may exclude the above-mentioned thresholds from taxes every twenty-four months, that means that you could sell every 2 years and keep the profit free from taxation.
- Preferential Tax Treatment
When the home buyer receives more profit compared to the allowable exclusion upon your home’s sale, that profit will basically be considered as the capital asset, provided that you owned the house for more than a year. Capital assets have preferential tax treatment, that means that even if your sales profit surpasses the exclusion, the taxable part will be less than you can imagine.
- Equity Loans
Clients who carry balances and credit card can’t reduce the interest paid, that can also cost up to 18-22%. The equity loan interest is usually much less and it’s deductible.