How Buying A Home Can Prepare You For Retirement

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Everyone needs a room over their head, but there are many different ways to make sure that you’re protected from the elements. These days more and more people are choosing to rent rather than buy because of a wide variety of reasons. Many people feel like they can’t afford to buy but others believe it’s a smarter financial decision. This is understandable on some levels, but it might also be a mistake. One crucial thing that people often overlook is the advantage that homeowners have in terms of retirement.

 

Homeownership pays off over time. Renting is an option that offers a variety of up-front benefits, but these come with long-term trade-offs. To begin with, when you own a house some costs might rise over time, but these will be offset by gains in other areas. People often point to things like taxes and repairs, things that tend to go up over time. These expenses are something that homeowners need to keep in mind, but they should be weighed against the fact that the value of the home is also likely to rise over time. Rental properties also cost more over time, and the owners will always try to raise rent to make up for rising costs, so don’t feel like you can avoid rising costs by renting.

 

The tax code in most places is designed to encourage home ownership. When people criticize home ownership, they often point to property taxes as a drawback. No one likes to pay property taxes, but it’s worth noting that property tax payments can be deducted when tax season comes along. Rental payments usually aren’t eligible for deductions in the same way. You might not be interested in deductions now, but by the time retirement comes into view you should be looking for as many deductions as you can if you want to hold onto as much as you can for your golden years.

 

When you buy a home the payments, you make every month go to building up your equity. When you rent the money you pay every month goes towards building someone else’s equity. There are advantages and drawbacks to both methods, but overall homeownership pays off bigger when retirement rolls around. If you’re smart about landing an affordable home at a good rate, then your years of investment can pay off big when retirement rolls around, while renters are left with little to show for their years of payments.

 

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