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- Pride of ownership is the real number one reason why people yearn to own their home. It means you can paint the walls any color you desire, turn up your music, or decorate your home in according to your own tastes. Home ownership gives you a sense of stability and security. It is making an investment in your future.
- Real estate over time has been considered a good investment because most of it has appreciated. Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated, since 1968 it has average 1.7% over inflation. As homeowners build equity and can borrow against that equity for a variety of reasons that could include college, medical, or to start a business.
- Tax Benefits of qualified mortgage interest and home equity loans are deductible for income tax purposes. This enables most of people to increase their pay exemptions thereby increasing you net pay.
- Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes.
- A homeowner can exclude up to $500,000 of capital gain if married, filing jointly or up to $250,000 if single or filing separately for homes that have been the taxpayer's principal residence for the previous two years. There is no age requirement for taking the capital gains exclusion. It is not necessary to purchase a replacement home more expensive than the one sold. Homeowners can buy a more or less expensive home with no tax consequences assuming their gain is less than the allowable amounts.
- Preferential tax treatment on gains that have been made from capital assets held more than one year is permitted by IRS. This is especially important for homeowners with gains in excess of the allowable exclusion.
- Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation. The way amortization works, the principal portion of your principal and interest payment increases slightly every month. It is lowest on your first payment and highest on your last payment. On average, each $100,000 of a mortgage will reduce in balance the first year by about $500 in principal, bringing that balance at the end of your first 12 months to $99,500.
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