Homeownership: How to Achieve Your Financial Goals

Should You Buy or Rent?

• Purchasingo Mortgageo Down paymento Pointso Additional feeso Tax deduction

Should You Buy or Rent?

• Renting?o No mortgageo No down paymento First and last plus securityo Set rento No tax deduction

Should You Buy or Rent?

• Insuranceo Homeowner’s or renter’so Liability

• Property taxes

Should You Buy or Rent?

• Feeso Assessmento Associationo Maintenance

• Upkeep and improvements

Should You Buy or Rent?

• Time• Job situation• Family status• Age

Can You Afford It?

• Housing expenses• Down payment• Recurring debt

Can You Afford It?

• Qualifying• Pre-approval• Compare rates

Mortgage 101

• Sources for loans• Types of mortgages

o Fixed rateo Adjustable rateo Hybrids

Mortgage 101

• Points• Mortgage payment

o Principalo Interesto Taxeso Insurance

Tax Advantages of Owning

• Points• Interest• Property taxes• Refinancing write-offs

Tax Advantages of Owning

• Interest on equity loan• Losses• Capital gain exclusion

Tax Consequences of Owning

• Not deductibleo Closing costso Commissionso Insuranceo Dues and fees

Using Equity Wisely

• Equity = value minus owe• Banks loan up to 80%• Interest tax deductible• Best for one-time expenses

Using Equity Wisely

• Equity loanso Provide lump sumo Fixed termo Locked-in rateo Set monthly payment

Using Equity Wisely

• Lines of credito Offer flexibilityo Ideal for irregular expenseso Helpful for higher income familieso Use as neededo Variable rate

Using Equity Wisely

• Avoid creating new debt• Could lose house• Shop for best rates• Read paperwork carefully

Owning Additional Property

• Rental propertyo Steady cash streamo Profit on saleo Tax deduction

• Vacation home

Owning Rental Property

• Various kindso Real estate investment trust o Direct investment

Owning Rental Property

• Selection criteriao Locationo Property conditiono Costs

Owning Rental Property

• Other considerationso Tenantso Rento Lease agreement

Owning Rental Property

• Other considerationso Legal restrictionso Insurance coverageo Maintaining occupancyo Housing market

Owning Rental Property

• Tax aspectso Property taxeso Income taxeso Expense deductiono Recapture depreciationo Capital gain or loss

Owning a Second Home

• Tax aspectso Mortgage interesto Property taxes

• Minimal rentalo Rental income tax freeo Expenses not deductible

Owning a Second Home

• Combined useo Income taxableo Deduct expenses

• Maximum rentalo Qualifies as rental propertyo Deduct more expenses

Owning a Second Home

• Complicated ruleso Repair days don’t counto Friends may count

• Selling the propertyo No capital gains exemption (most)o Principal residence (2/5)?

Thank You!