1. Owning Builds Wealth
Why contribute to someone else's mortgage when you can pay off your own home and build equity? Each monthly rent payment you make is moving wealth out of your pocket and into your landlords'. Did you know that your rent payment covers your landlord’s monthly mortgage expense? Each rent payment goes towards paying down your landlord’s mortgage balance which increases their equity over time. Those same rent payments could be put to work towards building your own equity. This ultimately, increases your net wealth and gives you access to money that can be used to invest in new real estate deals, buy or build a business, make custom improvements to your home etc.
Owning real estate allows you to take advantage of market appreciation. Massachusetts real estate values doubled over the last 10 years. That means if you purchased a home in 2011, that same home would be worth approximately 2x's the originally purchase price. If you rented in that same time frame, all that wealth would have accrued back to your landlord.
2. Owning Gives You Control
Owning gives you more control over your monthly housing expense. On average, rent in Massachusetts increases between 3 - 5% annually. Buying allows you to keep your monthly housing expenses predictable. While owning a home also means you are financially responsible for maintenance related repairs that are sometimes unexpected, the benefit still out weight the cost, as repairs to your home work to preserve the home’s value. Major replacements and improvements like roof work or kitchen updates have the effect of increasing the value of your home.
3. Owning Qualifies You For Tax Benefits
Homeowners qualify for a variety of tax benefits. The IRS allows taxpayers who own real estate to take dedications such as:
Mortgage Interest - You can deduct the interest you pay on up to $750,000 of mortgage debt ($375,000 if married filing separately). This allowance only applies to owners who use the home as a primary residence.
Property Taxes - You can deduct local property taxes in the year you pay them. This deduction is limited to $10,000 per year ($5,000 if married filing separately) and falls under the same umbrella as sales taxes and state and local income taxes.
Private Mortgage Insurance - The IRS considered PMI as tax deductible mortgage insurance. This benefit phase out after a certain income limit and is subject to expiration.
Consult with a certified tax professional for specifics regarding tax regulations and scenarios that apply to your personal circumstance.
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