February 23, 2012
Advantages of investing in real estate (homes) versus traditional options such as IRA’s, bonds or stocks:
With your IRA, you cannot live in it
When purchasing a home, money is still available for other investments. For example, one would be exchanging one housing expense (i.e., rent) with a zero return on investment with another (i.e., mortgage) that provides a return on investment.
Studies have shown that owning a home is no more expensive than renting. Yet, even if this wasn’t true, history shows that owning increases wealth. In most cases, mortgages are similar to a forced savings account.
Tax Rewards in owning a Home
There is no doubt that selling investments such as stocks or bonds is easier than selling a home, but typically comes at a price through paying capital gains. The capital gains tax you pay on financial gains you receive is taxed much higher. This sort of tax doesn’t apply the same in selling a home.
Just one example, a person can exclude up to $250,000 of the gain on your primary home if a person meets the ownership and use test, during a 2 year period ending on the date of the sale.
In the end
Although each investment has its pros and cons, real estate and home ownership has been one of the soundest investments over time with less tax burdens than traditional investments.
- Homeownership – as an Investment
- Homeownership: Is It a Good Financial Decision?
- Monthly Dividend Real Estate Companies
- How To Reduce Your Investment Risks
- Common Questions For Purchasing Real Estate In Panama