Why so Many People Decide to Become Homeowners

Although many people continuously hear about the benefits of owning a home from their friends or family, they may still be skeptical about whether it is the right thing to do. The best thing to do is to learn more about the process. The following points shed light on a few of the best reasons to buy a home.

1. Appreciation
Real estate values fluctuate considerably over the years, but they have always appreciated consistently in the long run. Many people see their home purchases as hedges against the impact of inflation. Movements of home values in the country are tracked by the Office of Federal Housing Enterprise Oversight. Changes are indexed by regional and metropolitan influences.

2. Ownership Pride
One of the main reasons people buy homes is to have something to be proud of. They are free to paint the walls, change the yard’s landscape design, make additions that comply with local codes and own pets. A home can also be a reward to someone who has worked hard to save for a down payment and improve credit scores.

3. Mortgage Interest Deductions
Tax rates favor homeowners. If a mortgage balance is smaller than the price of the home, the interest is always completely deductible on tax returns. Since interest is the biggest part of a loan, this is a great benefit for several years.

4. Equity Builds With Mortgage Reduction
As a homeowner pays down the principal amount of a loan, equity is gained. The principal portion of the payment increases each month, but that does not mean the total payment amount changes. This means a larger percentage of the payment amount goes toward the principal, which reduces the overall obligation.

5. Equity Loans
Equity loan interest is much less than credit card interest, and it is also deductible. Homeowners who carry credit card balances often pay between 18 and 20 percent interest. To pay off these balances, it makes sense to use a home equity loan. The interest on a credit card is not deductible. College money, home improvement projects, starting a business or paying for medical expenses are also valid reasons for taking out a home equity loan.

6. Property Tax Deductions
There is information about tax deductions for first-time home buyers in the IRS Publication 530. Taxes paid on a vacation home or first home are deductible on tax returns. Since 1978, annual property tax increases are limited to two percent in California after a property changes owners.

7. Preferential Tax Treatment
If buyers gain more profit than what is allowed on the sale of their home, the profit is considered a capital asset if the home was owned for longer than one year. Preferential tax treatment is assessed to capital assets.

8. Capital Gain Exclusion
If a homeowner maintains occupancy on the property for at least two of the past five years, there are tax exclusions for capital gains. Up to $250,000 is allowed for an individual, and up to $500,000 is allowed for married couples. There are no age exclusions. The above amounts can be excluded every two years. This means a homeowner could sell every two years, keep the profit and not worry about tax penalties.

About Brian Hendricks

Brian Hendricks is the President of Fidelity Insurance Group. Brian started Fidelity in 2003 with 0 clients. Today Fidelity Insurance Group is a Premier Independent Insurance Agency in Florida with over 3,000 families and businesses insured. Brian currently serves on advisory boards for 2 of the largest property insurance companies in Florida. Knowlege, Integrity, and Committment are his and his agency's guiding principles.
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