Mark Novak

RE/MAX ELITE REALTY
1 Bel Air South Parkway

Bel Air, MD 21015
Phone: (410) 515-0100

Click here to contact me anytime you have a question or need an explanation.

Tax Advantages of Owning a Home Result In Savings

None of that $140,777 is returned to you, either through any type of tax savings or as an investment. Homeownership, on the other hand has numerous tax advantages over renting a home, and those advantages can help you save money. For many homeowners, part of the monthly mortgage payment "comes back to you" in tax savings. Here is an example:

You purchase a home that costs $200,000. Your down payment is $10,000(plus closing costs - appraisal fees, transfer taxes, inspections etc. Grant money is available for down payment and closing costs)finance the balance with a 30-year fixed rate mortgage at 5.5% interest. Your monthly payments (not including utilities, maintenance , insurance, etc.) are:

Buying a first home can be an intimidating process. But the first step is deciding:

Do I want to own a home?

Can I afford to own a home?

Does owning a home make sense for me financially and emotionally?

If you are still struggling with those decicions, here are some facts that might help you take that important first step towards becoming a homeowner.

You Can't Afford NOT to Buy a Home!

Over the last ten years, the cost of rental housing in the U.S. has increased an average of 3.5% per year. If that trend continues, that means that an apartment or home renting for $1,000 per month will cost more than $1,300 a month in ten years. If you rent the same home for ten years, the total amount you would pay for rent will equal $140,777!

Year

Monthly Rent
(avg 1

$1,000

$12,000

$1,035

$12,420

$1,071

$12,855

$1,109

$13,305

$1,148

$13,770

$1,188

$14,252

$1,229

$14,751

$1,272

$15,267

$1,317

$15,802

$1,363

$16,355

Total Rent Paid Over Ten Years

$140,777

Monthly Mortgage & Tax Payments

mortgage

$1,079

property tax (@1.25% tax rate*)

$208

Total Monthly Payment

$1,287

tax savings per month (assuming a

25% income tax bracket)

Mortgage interest tax deduction

$216

Tax deduction for property tax

$52

Total Monthly Tax Savings

$268

Total Monthly Cost After Tax Savings

$1,019

*property tax rates vary by city and county

Click here to contact me anytime you have a question or need an explanation.

Owning your own home reduces your federal income tax bill by $268 a month! That is over $3,000 a year back in your pocket. Not to mention the fact that as you pay down your mortgage loan and as the value of the home rises, your equity - the wealth you have in your home - increases.

Annual Costs

Homeowner

Renter

Total Annual Costs

$12,948

$12,000

annual mortgage/rental payment

real estate taxes

$2,500

0 Tax Deductions/Equity Builders

mortgage interest tax deduction

$2,592

0 tax deduction for property tax

$624

0 mortgage principal accumulation

$2,559

0 appreciation

no growth

0 loss of value*

-$2,000

0 below trend growth**

$1,200

0 average growth***

$9,000

0 Annual Costs Less Equity Gains

$12,000

no growth

$9,763

loss of value*

$11,673

below trend growth**

$8,473

average growth***

$673

assumes 1% annual depreciation assumes a 0.6% annual appreciation assumes 4.5% annual appreciation

Click here to contact me anytime you have a question or need an explanation.

Buyers Come Out Ahead!

Given that price growth has recently deviated from its usual pattern of increase, the table above considers four different price growth scenarios, including a loss! You may be surprised to see that the homeowner still comes out ahead of the renter even if there is a DECLINE in the home's value over the next year. However, most experts agree that this will be the year that the home prices stabilize and there have been signs of this already for our area. Extraordinarily low interest rates and lower prices have ushered in some of the affordability conditions in a generation. Further, special tax advantages exist for buyers who purchase before December, 31 2009.

Click here to contact me anytime you have a question or need an explanation.

Homeownership is a Good Investment for Qualified Buyers

For a majority of Americans, their homes is their largest financial asset and a major player in their investment portfolio. The NATIONAL ASSOCIATION OF REALTORS^® estimates that home value rises, on average, by 4.5% a year nationally. Our Baltimore Metro area is closer to 6%. That's a steady return on investment; one's own home is a much less volatile asset than stocks, bonds, or mutual funds, even when the recent downturn is considered.

OK, So now we have a better understanding of how Buying a home can help us keep our hard earned money. Let us get to the good stuff and learn how we can build wealth for ourselves as apposed to making landlord wealthy through homeownership!

To learn How!

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Phone*

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Notes

Mark Novak

Buying a first home can be an intimidating process. But the first step is deciding:

Do I want to own a home?

Can I afford to own a home?

Does owning a home make sense for me financially and emotionally?

If you are still struggling with those decicions, here are some facts that might help you take that important first step towards becoming a homeowner.

You Can't Afford NOT to Buy a Home!

Year

Click here to contact me anytime you have a question or need an explanation.

Tax Advantages of Owning a Home Result In Savings

*property tax rates vary by city and county

Click here to contact me anytime you have a question or need an explanation.

Owning your own home reduces your federal income tax bill by $268 a month! That is over $3,000 a year back in your pocket. Not to mention the fact that as you pay down your mortgage loan and as the value of the home rises, your equity - the wealth you have in your home - increases.