How Would Home Ownership Be Something Beneficial To Me, Given My Circumstances? — Issaquah360.com

Home ownership provides important financial benefits and burdens to owners. Although there are many positive financial aspects to home ownership, a home cannot be valued in monetary terms alone.

            Tax Benefits: For Home Owners Only

The tax code provides benefits to home owners which lower the cost of home ownership.

Instead of the standard deduction on your income tax return, most home owners itemize their deductions when determining your income tax due, both mortgage interest and property taxes are deductible expenses (and save on taxes due).

Additional itemized deductions include state income taxes, gifts to charity, medical and dental expenses over 7.5% of your income, personal property taxes, and most moving expenses.

For married couples, profits of up to $ 500,000 on the sale of a principal residence ($ 250,000 for single taxpayers) are also excluded from tax on capital gains.

            Leveraging Is Another Advantage Of Home Ownership

A buyer can purchase a home and receive the full benefit of home ownership with a cash down payment that is only a fraction of the total purchase price. This is called leveraging, and it makes the rate of return on a home purchase greater than on other purchases with the same value, such as stocks, where the buyer must put up the entire price.

For most Americans, home ownership is a primary source of net worth and an important step in accumulating personal financial assets over the long term. Although property values have declined in many markets, Americans currently have a total of more than $ 6 trillion in equity in their homes, and for most families, home equity represents the largest share of net worth.

Leveraging has a dark side too though. When prices move down, they erase equity at a much higher pace than would be the case without leverage. For example, if you bought your home with a 10% down payment and prices decreased 5%, you would lose 50% of your equity. Home buyers in the 2003-2008 learned that lesson the hard way, with many thousands losing all of their equity and their homes, quickly.

There is No Place Like Home

Not only can home ownership be a stepping stone to greater financial well-being, it provides a permanent place to call home and great personal satisfaction.

Academic research also shows that home ownership provides a wide range of social benefits and strengthens the nation’s people and its communities.

Home ownership is truly a cornerstone of the American way of life.

And despite the housing downturn, home owners still place high value on owning a home, and recommend home ownership to others. According to a January 2012 poll*:

* Survey of 1,500 likely voters conducted on Jan. 2-5, 2012, on behalf of the National Association of Home Builders by Public Opinion Strategies in Alexandria, Va., and Lake Research Partners in Washington, D.C. Cited from http://www.nahb.org/generic.aspx?genericContentID=138570 and retrieved on 7/30/2012

Read More: This article is one of a series articles answering three questions:

Taken together, these will help you decide if it is the right time for home ownership. Check out the series:

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