FIRST TIME BUYERS
So your friends and family have all been telling you to buy a home right? They may be right once you weigh the benefits of home ownership. There are approximately 27,000 renters on the island of Oahu alone who could qualify for mortgages. Here are a few good reasons why home ownership may benefit you.
PRIDE OF OWNERSHIP
Pride of ownership is the number one reason people strive towards home ownership. Whether it be painting the walls with your favorite color or planting your favorite smelling flowers in your yard, home ownership provides the sense of stability and security while making an investment in your family's future.
There are several tax benefits provided by home ownership. These include mortgage interest deductions, property tax deductions, capital gain exclusion, and preferential tax treatment.
Home ownership provides favorable tax rates and shelters to owners. Mortgage interest, which is deductible on your tax return, is the primary component of each mortgage payment.
Additionally, real property taxes paid for a first home are also deductible for income tax purposes.
If a homeowner has lived in their home for two of the past five years and sells their property, they can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains. Basically, whatever profit you make from the sale of your home provided you meet the criteria, you are excluded from paying taxes on the amount threshold you fall into. Even if you profit from the sale of your home for more than the excluded amount it is considered a capital asset, which is a preferential tax treatment.
Each month when renters pay their rent where do you think it goes? Traditionally, it is helping to pay the owner's mortgage by principal reduction. Mortgage principal reduction builds equity for homeowners as well as gives them leverage to borrow against this equity at a more favorable rate than traditional interest rates and it is also deductible.
There are many state and federal programs to assist first time home- buyers. These include the Hula Mae Program, HUD program homes, and down payment assistance programs. Whether being a seasoned real estate investor or a first time home buyer there are certain basic steps to the home buying process that are normally taken
Contact us to see if home buying is the right move for you and your family.