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Blog by Philip Jones

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HOME OWNERSHIP BUILDS WEALTH 3 WAYS

        HOME OWNERSHIP BUILDS WEALTH 3 WAYS

 

            As economic conditions fluctuate, people wonder whether it is a good time to buy and sell real estate.  Yet no matter what conditions exist in the real estate marketplace, there is a fundamental rationale that makes buying a home a sensible investment.  Owning property is a way to build wealth.

            Real estate builds wealth via equity.  When you make your monthly mortgage payment, you accumulate home equity as you pay down your debt.  At some point, the home will be worth more than what you owe. 

Real estate builds wealth via tax benefits.  Taxpayers who own property can deduct interest and taxes paid on the home.  When you sell your principal residence, you can keep up to $500,000 in tax-free profits as married taxpayers, or $250,000 as a single taxpayer.

Real estate builds wealth via appreciation. The return on your initial investment grows at an average of 6 percent per year, and often much more.  If you pay off the mortgage, you will be living rent-free in a home that continues to appreciate over time. 

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