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Income Tax Savings
You can deduct all of the interest on home loan and property
taxes you pay in a given year from your gross income to reduce
your taxable income.
Stable Monthly Housing Costs
When you rent a place to live, you can certainly expect your
rent to increase each year. If you get a fixed rate mortgage
when you buy a home, you have the same monthly payment amount
as long as you have the loan. Even if you get an adjustable
rate mortgage, your payment will stay within a certain range
for the entire life of the mortgage.
San Diego housing is expensive but imaging how much San Diego
rent might be in ten, fifteen, or even thirty years from now?
Which makes more sense?
Forced Savings
Mortgage payments help build your net worth. Unlike rent payments,
a portion of the money you pay goes toward building equity
(difference between the market value of a house and the amount
still owed on the mortgage). As you pay off the mortgage,
you owe less on the home and "own" a larger share
of it .Find out how much you are paying for rent!
Another advantage is real estate generally appreciate about
five percent a year.
Additional tax benefits
The tax code is generous to homeowners. Not only can you deduct
the interest on your home mortgage, but you can avoid taxes
on the profit from selling your home if you buy another home
of equal or greater value within two years of the sale. Also,
IRS rules allow you to avoid taxes on up to $250,000 (or $500,000
if you are married and filing jointly) of profit from the
sale of your home.
The Best Investment
Generally, homes appreciate about five percent a year. Some
years will be more and some year will be less, the figure
will vary from neighborhood to neighborhood, and region to
region. A buyer can purchase a home with a cash down payment
that is only a small fraction - as little as 10 percent or
less - of the total purchase price, but the return is based
on the total value of the property. This is called leveraging
an investment, and it makes the rate of return on a home much
greater than on an equivalent investment where the buyer must
put up the entire purchase price.
Here's how it works. If a buyer makes a down payment of $10,000
on a $100,000 home and the home's value increases to $105,000
during the first year of ownership, then the homeowner's equity
(the value of the home minus any mortgage debt) has increased
from $10,000 to $15,000. That is a 50 percent increase on
your investment in just one year.
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The Benefits
of Owning Your Own Home
