Owning Real Estate
Real estate as an investment is diverse. You can live in, improve and enjoy your home while building equity and receiving tax benefits.
If you are a first time home buyer, remember these key benefits:
Your mortgage interest is tax deductible. Depending on your tax situation, up to 28 percent of the mortgage interest you pay can be deducted off your tax bill. Since most of your mortgage is interest payment at the beginning of a mortgage’s 30-year term, the savings may be significant.
You are no longer subject to rent increases.
You build equity as you pay down your mortgage (principal) and as property values rise.
Your equity may allow you to sell your home for a profit at a future date. OR you can borrow against your home’s equity.
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If you are selling and/or buying a new home:
Ongoing low interest rates may allow you to buy-up to a new property with a comparable mortgage payment.
You can choose more or less living space to better fit your current needs.
Under new tax laws, you can often defer or eliminate taxes on your profit when you sell. An individual receives a $250,000 tax exemption. For couples it’s $500,000. There is a condition in the tax law that you must live in the home for at least two years to qualify for the exemption; otherwise you will be subject to capital gains. Please consult with your tax accountant to identify your specific tax needs.
You can maintain your first home as a rental property to produce income and use it as security to mortgage a new home. Be sure to consult with your tax accountant to review the future tax implications of investment properties.
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