There are lots of homeowners out there who are probably thinking whether it was a good decision to invest in real estate. Likewise, some renters are trying to figure out if it was right for them to rent a property instead of buying one. It is a question that has been asked by many, but not everyone has been able to figure out the correct answer. In simple terms, renting might seem like a good decision because it doesn’t require a huge capital on your part and involves less hassle, but in the long term, owning a property is a better decision for you. Why? Here are some of the benefits of owning real estate as opposed to renting:
1. Sense of Community
Even though renters can also enjoy a sense of community where they choose to rent a property, neighborhoods comprising of homeowners have a completely different sense of community in comparison. There is a mutual benefit to homeowners if they keep their neighborhood safe, clean and friendly for their growing families. Furthermore, maintaining the curb appeal and keeping homes updated can also increase the value of the property, something that renters cannot benefit from.
2. Income Tax Benefits
When homeowners are calculating their gross income, income tax laws allow them to deduct the mortgage interest and property taxes that they pay in order to arrive at an adjusted gross income. This enables homeowners to enjoy plenty of tax credits and they end up paying a lower amount of tax as compared to a renter with the same income.
3. Tax-Free Capital Gains
The tax credits for owning real estate don’t just end with income tax calculations. Some interesting details in this regard can be found here. When homeowners decide to sell their property and make a profit from it, they can reduce the amount of tax that has to be paid on that profit. The exemption provided is higher if joint taxes are being filed instead of a single tax payer.
4. Fixed Monthly Payments
One of the biggest perks of owning a property is that you have to make fixed monthly payments for mortgage and they are not subject to any inflationary pressures. As far as renting is concerned, controlling he lent is not in your hands as the landlord can decide when to increase the rent and you have to pay it or find a different place to rent altogether, which involves a lot of hassle.
5. Ability to Make Changes
A major downside to renting a property is that it doesn’t belong to you, which means you will not have the freedom of making any changes to it. If you do want to do something, you have to ask for permission from the owner and spend your own money. In case the change increases the property value, you will not be able to get any benefit from it as the property doesn’t belong to you. This hurdle doesn’t exist when you own real estate as you can make the changes you want and reap the rewards as well.
6. Increase in Value
Aside from rare situations and circumstances, the real estate market is typically on the rise, which means the value of property tends to appreciate rather than depreciate. Thus, in the long term, your investment is going to pay off and provide you with huge returns. The same cannot be said if you are renting a property because an increase in its value is only going to increase the rent instead of helping you in any way.
Thus, these are some of the very strong reasons why it is a better choice to own real estate.