homeownership: how to achieve your financial goals
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Homeownership: How to Achieve Your Financial Goals. Should You Buy or Rent?. Purchasing Mortgage Down payment Points Additional fees Tax deduction. Should You Buy or Rent?. Renting? No mortgage No down payment First and last plus security Set rent No tax deduction. - PowerPoint PPT PresentationTRANSCRIPT
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Homeownership: How to Achieve Your Financial Goals
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Should You Buy or Rent?
• Purchasingo Mortgageo Down paymento Pointso Additional feeso Tax deduction
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Should You Buy or Rent?
• Renting?o No mortgageo No down paymento First and last plus securityo Set rento No tax deduction
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Should You Buy or Rent?
• Insuranceo Homeowner’s or renter’so Liability
• Property taxes
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Should You Buy or Rent?
• Feeso Assessmento Associationo Maintenance
• Upkeep and improvements
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Should You Buy or Rent?
• Time• Job situation• Family status• Age
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Can You Afford It?
• Housing expenses• Down payment• Recurring debt
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Can You Afford It?
• Qualifying• Pre-approval• Compare rates
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Mortgage 101
• Sources for loans• Types of mortgages
o Fixed rateo Adjustable rateo Hybrids
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Mortgage 101
• Points• Mortgage payment
o Principalo Interesto Taxeso Insurance
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Tax Advantages of Owning
• Points• Interest• Property taxes• Refinancing write-offs
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Tax Advantages of Owning
• Interest on equity loan• Losses• Capital gain exclusion
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Tax Consequences of Owning
• Not deductibleo Closing costso Commissionso Insuranceo Dues and fees
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Using Equity Wisely
• Equity = value minus owe• Banks loan up to 80%• Interest tax deductible• Best for one-time expenses
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Using Equity Wisely
• Equity loanso Provide lump sumo Fixed termo Locked-in rateo Set monthly payment
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Using Equity Wisely
• Lines of credito Offer flexibilityo Ideal for irregular expenseso Helpful for higher income familieso Use as neededo Variable rate
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Using Equity Wisely
• Avoid creating new debt• Could lose house• Shop for best rates• Read paperwork carefully
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Owning Additional Property
• Rental propertyo Steady cash streamo Profit on saleo Tax deduction
• Vacation home
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Owning Rental Property
• Various kindso Real estate investment trust o Direct investment
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Owning Rental Property
• Selection criteriao Locationo Property conditiono Costs
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Owning Rental Property
• Other considerationso Tenantso Rento Lease agreement
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Owning Rental Property
• Other considerationso Legal restrictionso Insurance coverageo Maintaining occupancyo Housing market
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Owning Rental Property
• Tax aspectso Property taxeso Income taxeso Expense deductiono Recapture depreciationo Capital gain or loss
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Owning a Second Home
• Tax aspectso Mortgage interesto Property taxes
• Minimal rentalo Rental income tax freeo Expenses not deductible
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Owning a Second Home
• Combined useo Income taxableo Deduct expenses
• Maximum rentalo Qualifies as rental propertyo Deduct more expenses
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Owning a Second Home
• Complicated ruleso Repair days don’t counto Friends may count
• Selling the propertyo No capital gains exemption (most)o Principal residence (2/5)?
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Thank You!