Topic Objective: To expose consumers to the economic benefits of owning a home.

Is it the “American Dream” to own a home? For most adults it is. When we focus on the dream it become the thoughts of having a place of our own. A home that you can put your own creativity in: beautiful wall paper, painted walls of your choice, new carpet, maybe some hardwood floors, tile the bathroom, build a deck, and plant trees, bushes and flowers. Whatever it is you do, you take pride in doing it.

Other than the opportunity to put your creativity into a home of your own, there are several financial incentives in home ownership. These benefits include tax advantages and equity growth.

Tax Advantages
* Annually the home owner is allowed to deduct the interest and real estate taxes when filing their federal and state tax return when itemizing deductions. Example: On a purchase of a $250,000 home with a 6.00 % interest rate for a $200,000 loan the following annual deductions would be realistic for the first few years of the loan:
Interest $12,000
Tax 3,750
If you were in a 15% tax bracket the Annual savings would be $2,362.50

* When selling a home, as long as you have lived in the home two of the last five years you can take capital gains of a minimum of $250,000 if you are single or $500,000 if married without paying any income taxes on the gain.

Equity Growth
At a 5% annual appreciation rate on a $250,000 home in ten years the home would have a value of $407,220, a gain of $157,220 and this could be tax free if you sold the property.

Self evaluation on Benefits of Buying a home

1. Home owners may deduct the following home expenses on their personal
tax return:
_____ a. Interest
_____ b. Tax
_____ c. Maintenance
2. Capital gains are tax fee on gains up to $250,000 when a home is sold
providing:
_____ a. The owner has lived in the home for 5 years.
_____ b. The owner has lived in the home 3 of the last 5 years.
_____ c. The owner has lived in the home 2 of the last 5 years.
3. Annual appreciation of 5% on a $250,000 home would accumulate in
ten years to:
_____ a. $50,000
_____ b. $100,000
_____ c. Over $150,000
Answers: 1. (a & b) 2. ( c ) 3. ( c )