Ask The Money Coach

No matter what your age, gender, income, race, religious, professional, or marital status, being a homeowner affords you a range of financial perks, privileges, and options that simply are not available to renters.

The Upside to the Dollars and Cents of Being a Homeowner

Do you realize that as a homeowner you are legally entitled to write off up to $100,000 a year in mortgage interest on your taxes? This is a huge economic benefit, especially in the first few years after you obtain a mortgage, because most of the mortgage payments you make early on go towards paying interest on your loan, not the principal.

Juicy Tax Breaks

As a homeowner, the federal government also lets you take a tax deduction for property taxes. This is a substantial financial benefit considering that the property tax bills run into the thousands of dollars for millions of homeowners. What’s more first-time homebuyers get a tax credit worth up to $8,000, and current homeowners buying a new or existing home get up to $6,500 tax credit for any home purchased between until April 30, 2010. Additionally, for those of you who will be fortunate enough to watch your home appreciate significantly in value over time, Uncle Sam provides the mother of all tax deductions: if you’re single, and you sell your home, you get to keep up to $250,000 in profits completely tax free; for couples this tax benefit is a whopping $500,000. None of these tax breaks exist for renters.

Will Your Home Be Part of Your Legacy?

Lastly, being a homeowner entitles you upon your death to pass on your home to a spouse completely tax free. Alternatively, you could leave your home to your children, another family member, a friend, or a charity on a tax-advantaged basis if you do some smart financial planning.

I’m going to assume that you already know (or at least suspect in your heart) that you’d be better off owning in the long run instead of renting forever. That’s why anyone considering homeownership needs to consider not just the financial benefits of homeownership, but also the ongoing financial costs associated with being a homeowner. Unfortunately, too many times people think solely about the perks and the “rights” of being a homeowner; they fail to consider the responsibilities and the ongoing expenses that come with this privilege.

So if you want to be a homeowner, my advice is this: focus on the proactive steps you can take – starting today – to get yourself ready for homeownership, and learn how to keep that home, without losing it to foreclosure. Once you cross the threshold into homeownership, you’ll be positioned to enjoy your dream house for all its worth.