Provided by the California Association of REALTORS Department of Research and Economics.
The obvious advantage of homeownership is a place for you and your family to live. But as you get ready to make what is probably the most important purchase of your life, consider the fringe benefits of owning a home: appreciation and tax advantages.
In California, if you bought your home five years ago at the then median price of $241,350, in just five years your investment would have more than doubled with the May 2005 median price at $522,590. That's approximately 20 percent per year return_a remarkable return on your investment in any circumstance. Now if you decide to sell, the equity gain on the sale of your home would be $281,240. If you are single, that amount earned would be almost entirely tax-free and totally tax-free if you are married and filing jointly according to the capital gains tax laws.
As your primary residence, there is a double advantage in expenditures such as renovations, maintenance, and repairs. These improvements increase the value of your investment, but also improve the quality of your living environment, your neighborhood, and your community.
Along with home equity gains and overall appreciation, there are other huge tax advantages to owning your own home_interest and property tax deductions.
As for all the speculation in the housing market, it is important to remember that most homeowners buy homes to occupy as their primary residence, and are less likely to be immediately affected by adverse economic and market circumstances. Unlike the stock and bond markets where individuals buy purely for investment purposes, the housing market is driven by the desire to achieve the American dream of homeownership and plant roots in a community.
Homeowners yield many benefits, especially when tax season comes around. Make the most of it, in terms of the gratification you get from living in your own home, and from the economic advantages it offers.
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