The pride of ownership, home value appreciation, mortgage interest deductions, and property tax deductions are a few of the best reasons. Other benefits include capital gains exclusion, preferential tax treatment, building equity through mortgage reduction, and equity loans.
If you're like most people weighing whether to make their first home purchase, you've probably listened to the advice of friends, family, and co-workers, many of whom are likely encouraging you to buy a home. However, you may still wonder if buying a home is the right thing to do. Having reservations is normal. The more you know about why you should buy a home, the less scary the entire process will be. It's reasonable to double-check yourself, though.
Here are good reasons why you should consider buying a home:
Pride of Ownership
Pride of ownership is probably the number one reason people enjoy owning their own homes. It means you can paint the walls any colour you desire, turn your music up, attach permanent fixtures, and decorate your home according to your own taste. Homeownership also gives you and your family a sense of stability and security. It's investing in your future—equity that will grow with you the longer you are in the home.
Beyond pride of ownership, it's important to realize another benefit. Although real estate values move in cycles, housing values have consistently appreciated. Home values have increased over time.
Mortgage Interest Deductions
Homeownership is a superb tax shelter, and tax rates favour homeowners. Sometimes the mortgage interest deduction can overshadow the desire for the pride of ownership as well. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return. For a large portion of the time you pay down your mortgage, interest is the largest component of your mortgage payment.
Property Tax Deductions
GRA offers tax benefits for first-time homebuyers. In general, you can deduct state and local real estate taxes. Most homeowners pay their property taxes as part of their monthly mortgage payments. Capital Gains Exclusion As long as you have lived in your home for two of the past five years.
Mortgage Reduction Builds Equity
Each month, part of your monthly payment is applied to your loan's principal balance, which reduces your obligation. The way amortization works, more of your payment goes toward the principal and less to interest each month. The amount of your payment going toward the principal is the lowest on your first payment and highest on your last payment. The longer you are in the home, the more equity you are building with each payment.