I’m often asked if it’s better to rent or to purchase a home. Unfortunately, there are quite a few factors to take into consideration, so there is no “one” answer that covers all these areas. In our area, Palm Springs California, we have both renters and buyers….and in many cases; the renter will eventually become a buyer! If the market is going down, then renting may be best until the market hits bottom and begins to climb upwards, which it will always do. If you are suffering ill health and you are unable to sustain a home, then rent may be a better option. But in most cases, BUYING a HOME still has many more attractive advantages over renting.
Here are just a few of the tax benefits to home ownership.
- Home owners can take an itemized deduction on interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home. This deduction could potentially reduce the cost of borrowing by one-third or more.
- Home owners can deduct both state and property taxes paid from their federal income taxes.
- Home owners can also deduct several closing costs in a home purchase, such as loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.
- Home owners who have lived in their home for two of the prior five years prior to its sale do not have to pay income tax on the majority of their profit. A single home owner does not pay taxes if their capital gains was below $250,000 and for a married couple who files jointly, the amount is $500,000.
- Home owners can deduct from capital gains any home improvements that add value to the home. This does not include cosmetic things like paint, however, a room addition or swimming pool would definitely qualify for this deduction.
- For more Government tax information click here.
Therefore, the question you need to ask is “will home ownership benefit me?” If the answer is ”Yes,” then give me a call or email me. I’m here to help you find a great property at a great price! Click here for more information on Buying a Home.
IMPORTANT: If you or someone you know is interested in buying or selling a home in the Palm Desert Area, try searching properties on the same Desert Area MLS Realtor’s use, or give me a call….or visit my website at Palm Springs Homes and Estates. I will be happy to give you or your referral my “red carpet service.” After the sale, I will send you a $50 Gift Certificate towards dinner in a fabulous Palm Springs Area Restaurant so you can celebrate!
Brought to You By Your Favorite Realtor,
Nancy Hankin
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