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Saturday, June 25, 2022

5 Reasons Why Buying A House Is The Best Investment

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Homeownership is the cornerstone of many people’s dreams. Also, it’s a crucial milestone of adulthood and a significant financial investment. You see your friends achieving it and wonder when it will be your turn, if homeownership is possible for you, and if it’s the right move.

Many questions go through your head as you contemplate this next step. You may feel like you need to wait until you’re older or more financially stable—however, there are several compelling reasons to buy a home sooner rather than later.

For a little help, here are a few valid reasons why buying a house is one of the best investments.

Real Estate Appreciation

Real estate appreciation is a good reason to buy a house. Why? Because it provides the homeowner with a built-in equity cushion. That’s right, as your home’s value goes up, so does your equity. And if you need to sell or refinance for any reason, that extra equity can give you some much-needed financial breathing room.

Best of all, home appreciation is a gift that keeps on giving. Unlike other investments, your home will continue to appreciate year after year, thanks to the magic of inflation. So even if you don’t sell or refinance, you’re still building equity.

So, if you’re still undecided whether to buy a house or not, remember this: real estate appreciation is a powerful force that can work in your favour.

Tax Deductions

Buying a house comes with favourable tax deductions. For example, the interest you pay on your mortgage is tax-deductible. This deduction can save you a lot of money come tax season. 

When it comes time to sell your house, you will also be able to take advantage of the capital gains exclusion. It allows you to exclude up to $250,000 in profits from the sale of your home from your taxable income. 

There’s also the SALT or State and Local Tax deduction. This deduction allows you to deduct state and local property taxes and state and local income taxes from your federal taxable income. 

Something to Pass Along

The ability to pass a house down to your children is one of the most significant advantages of homeownership. It’s an investment that can be appreciated over time, and it’s a physical asset that you can enjoy while you live in it. 

Unlike other investments, such as stocks and bonds, a house is a physical asset that you can see and touch. You can also live in it, which makes it a unique investment.

When you buy a stock or bond, you’re buying a piece of paper representing an ownership stake in a company or government. You don’t control how that company is run, and you can’t do anything to improve its performance. So, if you’re looking for a long-term investment, there’s no better choice than a house. 

For example, if you want to own your first home in Western Australia, Easystart first home builder Perth can help you navigate the process and make your dream home a reality.

Forced Savings 

Another good reason for buying a house is the concept of forced savings. With a mortgage, a portion of your monthly payment goes towards your loan’s principal, meaning that you are slowly building equity in your home. 

That equity can be used as a down payment on your next home or accessed through a home equity loan if you need cash for other purposes. And this can be helpful in retirement, as it gives you another source of income, whether you sell the house or take out a home equity loan. 

Inflation Hedge

Buying your own house can be an excellent inflation hedge because your mortgage payments will stay the same while the cost of living around you goes up. On the other hand, Renters’ deal diminishes the value of dollars over time.

What does that mean? To keep up with inflation, renters have to pay more and more each year to maintain the same standard of living. Eventually, they could be priced out of their homes altogether.

For example, today’s $1,500 mortgage payment won’t probably cost so much in the next ten years. But a renter may have to deal with increasing rents due to the lower dollar value over time. This reason alone is why many people choose to buy a house instead of renting. They want to protect themselves from the effects of inflation. 

Takeaway

Buying a house is a big decision. It’s not something you should rush into. You need to take your time, do your research, and make sure your reason for buying a house is good. It’s vital to double-check yourself and make sure you’re not buying a house for the wrong reasons, like because you want to show off or keep up with the Joneses. 

Trust me, buying a house for the wrong reasons is a recipe for disaster. Check out the good reasons outlined in this post to see if buying a house is the right decision.

Mick Pachollihttp://www.tagg.com.au
Mick created TAGG - The Alternative Gig Guide in 1979 with Helmut Katterl, the world's first real Street Magazine. He had been involved with his fathers publishing business, Toorak Times and associated publications since 1972.  Mick was also involved in Melbourne's music scene for a number of years opening venues, discovering and managing bands and providing information and support for the industry. Mick has also created a number of local festivals and is involved in not for profit and supporting local charities.