{"id":9781,"date":"2018-10-24T21:27:49","date_gmt":"2018-10-24T21:27:49","guid":{"rendered":"https:\/\/woodriverweekly.com\/?p=9781"},"modified":"2018-10-24T21:27:49","modified_gmt":"2018-10-24T21:27:49","slug":"its-not-just-the-tax-benefits","status":"publish","type":"post","link":"https:\/\/woodriverweekly.com\/index.php\/2018\/10\/24\/its-not-just-the-tax-benefits\/","title":{"rendered":"It&#8217;s Not Just The Tax Benefits"},"content":{"rendered":"<p class=\"p1\">When the standard deduction for married couples filing jointly was increased from $12,700 to $24,000 for 2018, there was some speculation that the bloom was off the rose of homeownership.\u00a0The thought was that if the tax benefits from being able to deduct the property taxes and interest was less than the standard deduction, that maybe the buyer would be better off continuing to rent.<\/p>\n<p class=\"p1\">With mortgage rates as low as they have been for the past eight years, payments have been lower and so has the amount of interest that was paid.\u00a0This, and the fact that sales and local taxes, which include property taxes, are limited to $10,000 a year on the Itemized Deduction form, has made it harder to reach the increased standard deduction.<\/p>\n<p class=\"p1\">The reality of the situation is tax benefits are only one of the components that make a home an excellent investment and it probably contributes the least of the top three benefits.\u00a0Principal reduction and appreciation build an owner\u2019s equity in an automatic way that is like a forced savings account.<\/p>\n<p class=\"p1\">In today\u2019s market, it is common for the total house payment to be lower than the rent a first-time homebuyer is currently paying.\u00a0As a homeowner, the buyer would have additional expenses like maintenance and, possibly, a HOA.<\/p>\n<p class=\"p1\">To illustrate the net effect, let\u2019s look at a purchase price of $275,000 with 3.5 percent down payment on a 4.75 percent 30-year FHA loan.\u00a0We\u2019ll assume the home appreciates at 3 percent annually and the buyer is currently paying $2,000 a month rent.<\/p>\n<ul class=\"ul1\">\n<li class=\"li1\">Total Monthly Payment (PITI + MIP): $2,115.44<\/li>\n<li class=\"li1\">Less Monthly Principal Reduction: $347.22<\/li>\n<li class=\"li1\">Less Monthly Appreciation: $687.50<\/li>\n<li class=\"li1\">Plus Estimated Monthly Maintenance: $100.00<\/li>\n<li class=\"li1\">Plus Homeowners\u2019 Association: $25.00<\/li>\n<li class=\"li1\"><b>Net Cost Of Housing: $1,205.72<\/b><\/li>\n<\/ul>\n<p class=\"p3\">The total payment is $2,115.44, including principal, interest, property taxes, property and mortgage insurance. However, when you consider the monthly principal reduction, appreciation, maintenance and HOA, the net cost of housing is $1,205.72. It costs $794.28 more a month to rent than to own. In a year\u2019s time, it would cost $9,531.36 more to rent than to own, which is more than the down payment required to buy the home.<\/p>\n<p class=\"p1\">In seven years, the $9,625 down payment would grow to over $101,000 in equity.\u00a0 The equity buildup far exceeds the tax benefits, which some people would have as an additional incentive.<\/p>\n<p class=\"p1\">Visit <span class=\"s1\"><b>tinyurl.com\/tws-rentvsown<\/b><\/span> to see what the net cost of housing would be using a home in your price range, or call me at (208) 309-1329\u00a0and I\u2019ll do it for you.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>When the standard deduction for married couples filing jointly was increased from $12,700 to $24,000 for 2018, there was some speculation that the bloom was off the rose of homeownership.\u00a0The thought was that if the tax benefits from being able to deduct the property taxes and interest was less than the standard deduction, that maybe [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","_pvb_checkbox_block_on_post":false,"footnotes":""},"categories":[38],"tags":[],"class_list":["post-9781","post","type-post","status-publish","format-standard","category-sponsored"],"_links":{"self":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/9781","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/comments?post=9781"}],"version-history":[{"count":0,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/posts\/9781\/revisions"}],"wp:attachment":[{"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/media?parent=9781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/categories?post=9781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/woodriverweekly.com\/index.php\/wp-json\/wp\/v2\/tags?post=9781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}