WHAT IS YOUR BIGGEST ASSET?
This isn’t a trick question.If you say it is your spouse, or perhaps your cheerful disposition, we won’t argue with you. But we are referring to your biggest financial asset. For many of us, our home is one of our largest financial assets. This is especially true as we become older. But even for younger people who have a mortgage, the equity in their home can be a significant part of their financial portfolio.
As a Realtor, I sometimes see customers who are downsizing or are selling their home for the last time. The resources their home provides for them can make the difference between living the rest of their lives comfortably or trying to decide how to make ends meet as life goes on.
When we think of wealthy people, we often picture those with diversified portfolios and financial investments including stocks, bonds, and retirement funds. But we sometimes overlook the appreciation potential of real estate, including our home. One of the best things about investing in your home is that we need a place to live anyway. We can combine a necessity with a sound financial investment.
Homebuyers can have a variety of criteria to consider including distance to work, recreation potential, access to worship, healthcare, and entertainment. Resale potential should always be an important financial consideration as well. The most important consideration for buying real estate should always be location, location, location.
A second rule to consider for appreciation is to buy the least expensive home in the best neighborhood you can afford. Since this article appears in the real estate section of The Whiskey Creek News,you may already own one of the 1,600 homes in Whiskey Creek. If so, you can rest assured that you have addressed the location rule well. Time, experience, and historical data show that Whiskey Creek homes hold their value and appreciate better than average.
Some savvy homeowners know that the U.S. tax system provides tax incentives to U.S. citizens who want to own their own home. One of the biggest is tax deductible interest on home mortgages. Others include the homestead exemption on real estate taxes and the Save Our Home limit on real estate tax increases. Another benefit with significant potential is income tax avoidance on appreciated value when a homeowner sells a property that was a primary residence and meets certain criteria. This is not available for most flippers and investors. Please consult your accountant or attorney for details. The bottom line is that our country sees the value of its citizens owning homes and provides economic incentives to foster this truly American dream.
High mortgage rates have been a deterrent to home buyers for several years. A long-awaited move by the Fed to lower interest rates appears to be finally happening. Home ownership and the housing market in general are expected to be two beneficiaries of lower interest rates. If you have any questions or comments about this article or other real estate issues, please contact Bob Oxnard at [email protected].
