THE ADVANTAGES OF OWNING A HOME
According to the National Association of Realtors® 60% of all home owners wealth is in the equity in their homes. Real Estate has proven itself over and over to be the safest long term investment and has always pulled it self out of recessions and fluctuations in the market. You just need to look back at history to see the constant growth over time. The Governments have encouraged home ownership by making tax advantages. Real Estate is a tax shelter, as a home owner the property taxes and the interest you pay on your loan is tax deductible from your income tax. Depending on what kind of financing you have the first several years of your mortgage almost all of your payment is interest which can add up over a 12 month period and can be a huge tax relief during tax time. When you have built equity in your home that you have lived in for two out of the past five years and you have decided to sell and buy another house or relocate you can roll over the profit up to $250,000 for a single person or $500,000 for a married couple without paying capital gains tax. An effective method of Building wealth with Real Estate is called Pyramiding. Pyramiding is using one property to dive the acquisition of additional properties. You can use two methods of pyramiding: Though refinancing or selling. Though refinancing, an investor would refinance and pull out the equity of there first home to buy or use as a down payment on additional properties usually income properties. The income would satisfy the new loan payments for the new property. The new property would be refinanced and the proceeds would be used to buy more properties and so on. Using this method the investor increases their income producing property holdings while simultaneously delaying the capital gains taxes that would result from a sale. The investor would also write off any expenses for maintenance and management of the income properties as well as depreciation. Pyramiding through sale, an investor would buy and improve a property then sell it to make profits, Sometimes referred to as flipping. Using the profits to buy another and doing the same with that and so on. As like all investments there is no investment that is 100% safe. Working with a knowledgeable Realtor you trust, your chances of success are greatly increased.
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