Owning a home is one of the best financial decisions you can make! For residents of Atlanta, GA, there are several ways that owning a home can help them to build wealth or provide a secure place to live and raise a family. So whether you’ve rented for a while and you’re considering buying your first home, or you’re ready to upgrade to your next home, it’s good to be aware of the financial benefits of homeownership! Keep reading to learn more from our Atlanta real estate experts.
Homeownership Cultivates Wealth Over Time
Real estate is another type of asset, like stocks or a savings account. Over time, the value of a home can appreciate (or increase). When it comes time to sell the house, many homeowners turn a profit with a well-kept home and the right market conditions! In fact, owning a home is often an excellent indicator that a family will be able to build wealth that they can pass down to the next generation. Homeownership is more than just buying a place to live; it’s a monthly investment in your future.
Homeowners Build Equity Every Month
Every month when you pay rent, the money goes to your property owner. Renters don’t benefit from a return on this investment other than having a place to live. However, with a mortgage payment on a home you own, a portion of the money goes to paying off the principal of the house. As years go by, your payments equal more equity for you! When homeowners stay in a home long enough to pay off the mortgage, their families have a place to live without worrying about a mortgage payment.
Even a few years into paying down a mortgage, you’ll have thousands of dollars worth of equity in the property. This equity accumulates tax-free and can eventually be used to pay for major purchases such as college or ultimately paying for retirement expenses.
Mortgage Interest Deductions Reduce Taxes
The federal government allows homeowners to deduct mortgage interest and closing fees on their taxes every year. For new homeowners, this can amount to thousands of dollars a year in tax refunds. The mortgage interest deduction can be especially important for people with high tax burdens.
It's important to note that these benefits are only conveyed to a primary residence, whether you live in downtown Atlanta or other areas throughout the city. Unless you invest in real estate for other purposes (with different tax rules), this means that a person can only take certain deductions for a home they live in. There are, however, ways to deduct mortgage interest for rental properties if making offers and owning homes becomes something you enjoy!
Apply Home Equity Loan Deductions
In the event that you choose to take out a home equity loan to use the equity built up in the property for home improvements, the interest on these loans can also be tax-deductible. The property must be your primary residence, however. The easiest way to qualify for this benefit is to refinance the entire property rather than take out a second mortgage, but both methods can lead to significant tax savings. Many accountants recommend that their clients use this deduction to lower the cost of paying off consumer debt or to start a new business.
The Capital Gains Exclusion
A real estate purchase is one of the few investments that can be excluded from capital gains when selling a home. As the value of your property grows each year, the added value of your asset is not taxable. In fact, many people have chosen to tap this increase in the value of their home through a home equity loan to reduce tax payouts. Later on, if you decide to sell the house, a significant portion of the profit made from the sale is protected from taxes. When rolling the profit into a new Atlanta, GA real estate purchase, homeowners benefit from even more protection.
Enjoy the Financial Benefits of Owning An Atlanta Home!
When thinking long-term, buying Atlanta homes is ultimately more cost-effective than renting. In fact, in many cases, a mortgage payment is typically less than or equal to the amount that many landlords charge for rent on a property. However, when paying a mortgage, you experience the financial benefits (instead of your property’s owner)!
If you have questions about purchasing a house or you're ready to start building your real estate investment portfolio, don't hesitate to get in touch with our team today. Revolution Rental Management helps renters become homeowners in Atlanta, GA! Our experienced real estate professionals can help you navigate your lease, find a home that fits your budget, and walk with you through the process.
Learn more about the benefits of owning a home! Download a free copy of “The Hidden Benefits of Home Ownership for Current Renters.”