Home Ownership

When we were fresh out of school, home ownership seemed like a scary proposition.  We wondered what is a title company, how hard is it to get a mortgage, and so on?  There were so many unknowns.

As we got a little older and a little smarter, we realized that home ownership was a path that was navigable.  Some of our friends were buying their first home and if they could do it, why couldn’t we?  So we took the plunge and walked into a realtor’s office and began bombarding them with questions.  We were so naive, and don’t forget there was no internet yet so that avenue to real estate knowledge wasn’t available.

Fast forward to 2016 and we revel in all the benefits of home ownership.  You build accumulated wealth by having equity in your home.  That equity can be turned into cash should you need funds for an emergency or large ticket purchase.  Plus, your long term gain in the home’s value beats the riskiness of the stock market or investing in Uncle Harry’s worm farm.

The tax benefits are also substantial.  You can deduct mortgage interest on your tax return on both your primary home and a second home.  So yes, a vacation home at the Jersey shore qualifies.  And if you rent that home for part of the year a slew of other expenses become tax deductible.  In addition, your local real estate taxes are deductible on your primary home.

If you decide to sell your primary home to upgrade to a larger home (or downsize), as long as you lived in it 2 of the previous 5 years, a married couple can exempt $500,000 of capital gain and a single person similarly up to $250,000.  You can get that capital gain exemption an indefinite numbers of times, meaning every 2 years you could change homes with no tax implications.

The latest national figures show that 64% of families are enjoying home ownership.  The family is more stable and the kids have the security of having the same friends and the same school.  Everyone is more at peace!