few IRS deductions available to renters (such as purchases, equipment, and utilities related to a home-based business) are available to homeowners as well.
However, the deductions available to you as a homeowner are enough to take the dread out of April 15. The biggest and best deduction is the interest paid on your mortgage loan. You can often deduct late payment charges, prepayment penalties, points paid to your mortgage lender (even if the person who sold you your home paid the points on your behalf), and real estate taxes.
We’re talking thousands of dollars in deductions against your tax liability. The tax deductions associated with homeownership are another reason owning is less expensive than renting.
YOU CAN HAVE YOUR INVESTMENTâ€”AND LIVE IN IT, TOO
The only way to derive long-term benefits from renting is to have and hold on to a rent-controlled apartment. The fact is when you stop renting, you simply move out. When you own a home, every mortgage payment you make builds equityâ€”increasing your ownership stake in the property. It’s like money in the bank. In the future, you can tap into your home equity to reduce debts, pay for your children’s education, or buy additional property. When you are ready to move, you can sell the property and use the proceeds of the sale to buy another homeâ€”maybe a bigger place in a better neighborhood.
A LEGACY FOR FUTURE GENERATIONS
Even if you decide to never sell your property, there’s an upside to buying a home. If you pay rent, at the end of 30 years, you’ll own nothing. If you pay a mortgage for 30 years, you’ll own an asset that serves as the foundation of wealth for yourself and your family for years to come.
Your home is an asset you can pass on to your children. Unlike rental space, the equity in your home belongs to you. Your home can be included in your will and other parts of your estate plan.
Bottom line: BLACK ENTERPRISE wants you to get on the path of homeownership today. Stop procrastinating! Stop the excuses! The final reason you should consider homeownership nowâ€”a BE reader will win $10,000 toward the down payment on their first home (see “Own Your First Home Contest” sidebar).
“I think the key to wealth building is homeownership, but I don’t think that we as African Americans understand that,” says Cameron. “Once we get to the point where we realize what owning a piece of property can do for us, I think it will allow us to advance as a people much faster.”
OWN YOUR FIRST HOME CONTEST
Our latest venture will make one of our reader’s dreams a reality
When we updated our Declaration of Financial Empowerment in January 2004, perhaps the most significant change was our decision to highlight the wealth-building benefits of homeownership. Not only did we make the tenet to use homeownership to build wealth one of the newly structured 10 principles of DOFE, but we listed it as our No. 1 principle.
Now we’re going to help one of our