Home Ownership Should Be Part Of Your Investment Strategy

 While home prices can go up or down, over the long run, home ownership should be part of your investment strategy.  And, the good news at least for now is that home appreciation is not taxed.  So as the value of your home goes up, you are increasing the equity you have in your home.  Currently, if you sell your home and it is your principal residence, couples can keep up to $500,000 in gain tax free.  Singles can keep up to $250,000 in gain tax free.  Amounts above these dollars would be taxed as capital gains, which at the moment is still lower than most income tax rates.  

If you earn interest or dividends on stock or other investments unless in IRA's or 401K's, you will pay federal and state income taxes on those earnings in most states each year.  So in essence appreciation on the value of your home works a lot like an IRA in at least deferring any taxes that could apply if and when you sell.  And, for now anyway since much of the gain on sale would be tax free for most people, home ownership is given preferential tax treatment.  

Usually, though not always over many years homes will increase in value.  This is especially attractive since mortgages today are at such low interest rates.  It could be that your house payment is about the same or less than what it would cost to rent like square footage, which makes home ownership even more attractive.  Yes, you will have things like maintenance and other expenses related to home ownership; but those things are factored into rents too.  

If you don't own a home do what you can to become a first time buyer.  If you do own a home, look at it as the investment that it has become.  You can Zillow your home to get an idea of current value.  At Paragon, we work with families to sell and buy homes at the best price.  We know that a home is an investment and counsel our customers on the benefits of home ownership.