Benefits of Home Ownership

I find that a rent-buy analysis doesn’t capture the whole picture of why homeownership is so important to building wealth and to producing satisfaction in domains other than financial. I thought I would take a moment and recount a few of the many advantages of home ownership.

Pride of Ownership. A homeowner has a personal stake in the viability, safety and aesthetic of their home, neighborhood and larger community. No one washes a rental car and no one improves a home they are renting.

Personal Autonomy. Owning your home gives you the final say in what color to paint the living room, what additions you to make to your home, and provides you with a stability that is critical to building a family and a community. No one will tell you that you need to move out; you make that decision.

Tax Benefits and Wealth. A homeowner benefits in several ways through the tax code. Mortgage interest and property taxes are deductible on your taxes. Check with your CPA to confirm this for your situation. Also, if you own your primary home for two of the past five years, unmarried persons can realize up to $250,000 on the sale of the house and pay no federal income tax on that gain. Couples can exclude up to $500,000.

Leverage. Typically, when you purchase a home, you will put a down payment and borrow the balance. This allows you to take advantage of appreciation on an asset that is many times larger than your initial investment. It is not uncommon for homeowners to see 50%-100% annual returns on their money invested.

Financial Opportunity. If your home appreciates, there could be opportunities to refinance or use a home equity line to access cash for a number of opportunities including other investments, pay for children's college or to do home improvements to further increase the value of your home. Renters will never have this opportunity.