2021 is a good year to buy your own home. If you’re still on the fence and you want a comprehensive list of benefits that you will enjoy if you’d buy a home this year, then you should read on.
Buying a home is a huge milestone. It is not something that one enters into without dedication and enough research. This article will help you with your research as we interviewed experts who gave us the main benefits of buying a home this year.
Benefit #1: Full Control
Full homeownership will allow you to take control of every single thing. You get to decide on your furniture, the number of rooms, the paint on your walls — and just about everything when it comes to your home. You’d get to decorate your space without having to consider others or ask for permission. You will be the boss.
You will also have a solid sense of stability and security. Owning a home is a solid investment that will secure a bright future for you and your family.
Benefit #2: Property Appreciation
Real property prices only ever go up every single year. Real property experts predict that houses in Australia are set to increase by 16% in the coming years. This very appreciation is the main benefit that you’d be securing if you’d choose to buy a home this year. When it comes to real property appreciation, the earlier the better is always the case. All finance experts know that home investment is a perfect hedge against inflation. If you want to see just how much appreciation is expected in the coming years, then you should check out Australia’s House Price Index.
Benefit #3: Tax Deduction
This benefit is all the more solid for your first-time homebuyer periods. House and land packages for first home buyers in Perth enjoy numerous tax deductions. You may be able to deduct numerous real estate taxes if your purchase will qualify. You may even choose to integrate your property taxes with your monthly mortgage payments.
You’d also get to enjoy numerous tax deductions that are exclusive to homeowners like the following:
pest control costs
To qualify for such deductions, you must:
Have a room at home that is dedicated to work
Run your business at home
Work at home
Benefit #4: Preferential Tax Treatment
You’d also get to enjoy preferential tax treatment if you’d buy your own home. This will be the case if you gained more profit during sales. You will then have what is considered capital gains and you’d get to pay less tax. For the sale to qualify as a capital gains tax, you should at least own your home for over a year. The discount? A whopping 50%.
Benefit #5: Exclusion of Capital Gains
Connected to having the benefit of enjoying preferential tax treatment, you would also enjoy capital gains exclusion. To enjoy this, you must pass two tests: the use test and the ownership test. Such tests require that you at least own your home for a year. You can’t enjoy capital gains exclusion if you did not own your home for at least a year. Australian citizens enjoy a massive 50% CGT discount.
Benefit #6:Mortgage Interest Deductions
Buying a home will allow you to enjoy numerous tax shelters. Many tax rates adjustments highly favor homeowners and you should not miss out on this. The deductions on mortgage interest can be so massive that some homeowners enjoy it way more than homeownership pride. You’d get to fully enjoy the perks of mortgage interest deductions as long as the price of your home is bigger than your mortgage balance. If that’s the case, then your mortgage interest will be fully deductible. This is extra special as everyone knows that you’d be paying for the interest for a long period during your mortgage payment.
Benefit #7: Equity Building
This benefit is possible through your monthly mortgage payments. You’d get to build more equity for every payment as long as you stay in your home.
You need to know that for every monthly mortgage payment, a big part of it goes to your principal loan and a small part goes toward the interest. Your principal payment will be at its lowest during the first few months. It will be at its highest in the last few months before payment completion. That is how amortization works. Knowing how the system works and taking advantage of it will allow you to build more equity.
Benefit #8: Equity Loans
Owning a home will also allow you to be flexible when it comes to your finances through equity loans. Your own home will allow you to borrow money through the equity that built up over time in your property. Paying for your home will give you more dibs to apply for more loans. This is helpful for people who want to start their own business or endeavor in home DIY projects. Some families even use equity loans to spend for holiday vacations. Regardless of your reasons, do know that you can fully take advantage of this benefit if you’d opt to buy a home today. You can effectively increase your equity by doing the following:
- Regular home payment for long periods of time
- Increasing your home’s value
- By utilizing a lump sum for cash out
Australian Housing Market
Home Equity Loans