Thursday, March 8, 2007

Financial Benefits to Homeownership

I've been compiling a list of benefits to owning my own home. The list is a bit longer than I expected, actually.
  • Interest paid is tax deductible. Based on a $300,000 home value, this will be about a $13,500 deduction, which is about $3375 in saved taxes. Of course, this benefit diminishes over time.
  • PMI premiums are deductible. This will not apply to my house purchase, as I plan on putting a full 20% down, but it's an added bonus, if you have to pay for PMI.
  • Home appreciation. When I first buy my house, I will own 20% of it. However, any increase in value becomes my profit as though I owned the entire house.
  • Immune to inflation. My mortgage payments will end up being rather large, given $240,000 in debt. But, this payment will not change. As time progresses and money becomes less valuable, my mortgage payment just gets easier.
  • Rental income. Being single, I have the flexibility to rent out rooms in my house. While this probably isn't as financially secure as having a wife with a second income, it certainly doesn't hurt anything.
  • Credit building. Due to my parents including me on their credit cars for the past 8 years or more, I have an excellent credit score of around 794. I can claim virtually no credit in this achievement, but it's kind of cool. The point, though, is that making regular payments on time helps your credit score.
  • As opposed to paying rent. When you pay rent, your money goes to the landlord (which I will be!). When you make your mortgage payments, you build equity. You become a little more your own landlord every month.
  • Tax deductible property taxes. Yep, property taxes are tax deductible, too. Of course, you still have to pay them.
  • Points are tax deductible. If you improve your interest rate, points are tax deductible. Which is kind of like getting 25% off the cost of points. Not bad.
Did I forget anything? I feel like I did. Leave a comment and notify me!

1 comment:

Lord Hughes said...

An additional bonus to owning a house is the flexibility to change whatever you want. Don't like the paint? Paint over it. Don't like the carpet, rip it up. But I suppose that is not a "financial" benefit. One financial benefit is that if you go through the same insurance agency as your car is with, you can get a discount for insuring both.