Why home ownership is the gift that keeps on giving


My neighbor’s house was put on the market earlier this week, and if I hadn’t seen it come to the market online or noticed the sign in the backyard, I would be convinced it had a secret stash of Tickle Me Elmo or PlayStation 5 or whatever toy stressed out parents can’t find in stores this year. She contracted yesterday for almost double what she paid for the house just a few years ago.

That’s the big real estate story this year: with so many buyers, sellers are able to convert a huge amount of equity in their home into more hard cash than they could possibly have. to imagine.

In the case of my neighbor, this sale will finance her retirement. It will also allow him to leave the state to be closer to his family. She is not alone. Real estate is the primary investment vehicle for most Americans because it is accessible, tangible, and relatively secure. All markets eventually turn, but real estate always trends upward over the long term.

But real estate is more than just a low buy and high sell proposition. Here are some things to consider if you are thinking about buying real estate:

• Real estate gains on your primary residence (generally) are not taxable. There are limits on how much equity you can earn before the IRS takes their share, but they’re really very high and most people don’t incur any tax liability for their sales. When you sell your home, the net proceeds are yours.

• Appreciation is based on the sale price, but your earnings are based on your down payment. Homes appreciate based on their aggregate total value, but buyers only have to offer a fraction of the price for a down payment on the loan. There are some great programs that require nothing at all (especially for veterans of the US military) and most people will qualify for 3-5% down payments. If I had bought my neighbor’s house five years ago for 5% off and my equity had doubled during that time, then my ROI would be 82% per year.

• Whether you are paying rent or paying a mortgage, you are paying for housing. Most of us have housing payments every month. If that payment is rent, you’re probably paying more per month than your neighboring landlord – and in today’s market, your rent is probably MUCH higher than your mortgage payment would be.

• Interest on your mortgage payment is tax deductible. The rent is not. Not only is your rent probably more than your mortgage payment, but you can’t deduct your rent from your taxable income.

• Owning a home gives you stability. When you own, YOU choose when to move: if you don’t want to, then you don’t. Landlords generally don’t offer the same commitment to their tenants. Part of my day-to-day job is telling tenants that the landlord is increasing their rent or is considering selling – and neither is particularly convenient for the tenant.

Homeownership isn’t just a good idea; it is literally the American dream. There are no dedicated TV channels to repaint your 401 (k). You cannot sleep in your Dogecoin. Your children cannot build a strong sofa in your stocks and bonds. Housing is fundamental and essential to our survival and our happiness.

Regardless of how 2022 unfolds, real estate will continue to be the gift that continues to be offered. And you can take THAT to the bank.

Alex Krumm is the president of the Sarasota Realtors and Manatees Association.


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