Buying a new home is one of the largest investments you will ever make. So it's important to spend time making certain you choose the right one. It's a process that can often be both exciting and overwhelming. That's why Armadillo Homes has put together this Home Buying Guide to help take you through this crucial process.
Armadillo Homes Buyers Guide
Pathway to Your New Home
Buying a home is a tremendous responsibility. But the more you know about why you should buy a home, the less overwhelming the entire process may appear to you. In fact, the benefits that come with home ownership are many.
Taking pride in owning your own home is the number one reason people desire to buy. In your own home, you can paint the walls any color, turn up the volume on your TV and stereo, attach permanent fixtures and decorate your home according to your own taste. There's no doubt that owning your own home gives you and your family a firm sense of stability and security. It's making an investment in your future.
While real estate moves in cycles, sometimes up, sometimes down, over the years, real estate has consistently appreciated.
Home ownership is one of the best tax shelters there is and our tax rates favor homeowners. As long as your mortgage balance is smaller than the price of your home, mortgage interest is fully deductible on your tax return.
Real estate property taxes paid for a first home and a vacation home are fully deductible for income tax purposes. Rent is not tax deductible.
Once you have lived in your home for two of the past five years, you can exclude up to $250,000 for an individual or $500,000 for a married couple of profit from capital gains. You do not have to buy a replacement home or move up. There is no age restriction, and the "over-55" rule does not apply. You can exclude the above thresholds from taxes every 24 months, which means you could sell every two years and pocket your profit-subject to limitation-free from taxation.
If you receive more profit than the allowable exclusion upon the sale of your home, that profit is considered a capital asset as long as you owned your home for more than one year. Capital assets receive preferential tax treatment.
Each month, part of your monthly payment is applied to the principal balance of your loan, which reduces your obligation. The way amortization works, you pay more interest than principle in the beginning of your mortgage and more principle than interest by the end of the loan. On average, each $100,000 of a mortgage will reduce in balance the first year by about $500 in principal, bringing that balance at the end of your first 12 months to $99,500.
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