Advantages of Buying a Home

1532 Words Aug 28th, 2013 7 Pages
Purchasing a Home
Buying a house for most is the American dream, but with today’s economy many people are unsure if the dream can be obtained. The main concern for most people would be the financial responsibility. Many people believe that the financial responsibility is overwhelming and they are just not ready. Although some people believe they are not financially ready to purchase a home, buying a house is a better option than renting an apartment for three main reasons. First, becoming a first time home buyer can be a very exciting experience that can have a positive long-term effect on some one’s life. Second, a home buyer can make any modifications or changes to a home. Third, and most important, you will eventually own your home.
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In contrast, our beloved Internal Revenue Code allows you to write off some homeownership expenses as itemized deductions. You can generally write off the interest on up to $1 million of mortgage debt used to acquire or improve your first residence (and a second residence if you have one). You can also generally deduct the interest on up to $100,000 of home equity debt secured by your first (or second) residence. You can write off real estate property taxes on as many personal residences as you own.
If you’ve been claiming the standard deduction, buying a home may not generate all the extra write-offs you were expecting. That’s because the standard deduction is a freebie. You don’t need any deductible expenses to claim it. For 2013, the standard deduction amounts are the following: $12,200 for married joint-filing couples, $8,925 if you use head of household filing status, and $6,100 for singles. If your itemized write-offs for the year add up to less than the standard deduction, you simply forgo itemizing and claim the standard deduction. Most individuals find themselves in the standard deduction mode until they buy a home. Then they finally have enough itemized deductions (mainly due to mortgage interest and property taxes) to exceed the standard deduction. However, only the incremental amount of itemized write-offs (excess of total itemized deductions