More and more potential new buyers are mistakenly finding home ownership to be too unaffordable. We’ve all had the harrowing conversation with our parents about how much their first home cost at the time that they bought it. What was once the down payment could now get you little more than a pile of sticks. However, these rising costs are exactly why you should buy! Someday, you could be having that same “harrowing” conversation with your kids, just from the other side of it. Let’s take a look at just a few of the ways that homeownership could help your pockets.
Equity
Some homeowners concerned with the initial cost fail to realize the potential gain for their property. The Federal Housing Insurance Agency shows a housing price index increase from 2020 to 2021 of nearly 18% in the Orange County area. If buyers who purchased their homes at the end of 2020 could sell their home only a year later for 18% more than the original purchase price, imagine the potential for buyers’ equity in 2022. As a buyer, jumping into the market sooner rather than later is a great way to capitalize on future earnings in an upward swinging market. Waiting will only mean housing prices overall continue to trend upward, and you miss out on those lost years’ worth of gain.
Tax benefits
We all love the end of March when Uncle Sam himself sends you your tax return. While it’s not free money it certainly feels like it, and those hundreds to thousands of dollars can help. Did you know that owning property can open you up to an even higher tax return? There are several deductions you can take advantage of but some of the most common ones are property tax and mortgage interest deductions.
When paying your federal income taxes, property tax deductions allow you to deduct up to $10,000 when filing jointly or up to $5,000 when single or filing separately. This includes your yearly property taxes as well as the taxes you may have paid when closing on your home. These deductions can be made from both a state and local level and will vary based on your location.
A second deduction option is to deduct your some of the interest you’ve paid on your mortgage loan. That “scary” interest you might have to pay on your loan can be used to help you deduct up to $750,000 if single or married filing jointly.
More options for tax deductions include deductions on your home equity loan, mortgage insurance, home office expenses, and you can even purchase discount points! Being a homeowner offers many unique ways to save.
In Orange County, more listings are being sold than are remaining active each month, meaning people are buying. Now is the time for you to be one of those people! With benefits like equity gain, tax breaks, and even more that we’ll go over next week, who wouldn’t want to be a homeowner?
