With today’s economy it is often difficult to determine the best course of action for your finances. Home ownership is one of those difficult decisions. Do you take advantage of the low interest rates and purchase a home while it is a buyer’s market? Do you wait until the economy is more stable before you commit to a large long-term loan obligation? Kiplinger supplies you with a guide to determine what might be best for your unique financial situation and the market conditions of your area. Follow the link to read their article, Should You Buy or Rent Your Home? – Kiplinger.
There are tax advantages to owning a home over renting. Typically the combination of your mortgage interest and real estate property taxes added to state taxes, charitable donations and miscellaneous deductions will give you enough deductions to itemize rather than taking the lower standard deduction. This effectively lowers your taxable income and reduces your overall tax liability. While this is a great tax advantage, I recommend you do not include this in your assessment of your personal finances when determining if home ownership is right for you. If your assessment of your personal financial situation determines home ownership is the best move for you, let the tax savings be an added benefit to be used to increase your savings. There are far too many unknowns in the future as to what tax deductions may be eliminated or reduced, to enter into a long term obligation, dependent upon a tax deduction that is available today. Assess your finances without consideration of the possible tax savings based on current tax law and you will be in a far stronger financial situation no matter what changes are made in the future.
Planning is the key to financial success. Weigh your options carefully before choosing. Each individual must make a true assessment of their personal financial situation in relationship to their short-term and long-term goals. Separate your emotions from the numbers. What do the numbers tell you? Let the numbers guide you.
- Why renters should consider buying a home (cbsnews.com)
- A 30- or a 15-year mortgage, which is right for you? (freedommortgage.com)
- TurboTax – Tax Deduction Wisdom – Should You Itemize? (turbotax.intuit.com)
- 9 New Reasons to Rent Instead of Buy (rentersinsurance.com)