8 Reasons To Invest In Residential Property

Top reasons that you should consider you primary residence as an investment.... Your home is like a giant stock that you live in; select it wisely, manage it, plan for the future, and you can make some great profits. Here are just a few reasons why you should think of your home as an investment:


1. Tax Breaks- you can deduct interest on your mortgage and local property taxes from your tax return. Your property taxes are fully deductable from your federal return. Over the time of the mortgage, this can add up to a lot of deductions.

2. Small money down, payment towards ownership you own more and more. Many investments require you to invest 100%, but with your home you can purchase with comparatively small amounts down.

3. Its a house, you can live in it try living in a T-Bill. People have been creative with their homes: from building a home-office to renting it out for a tv commercial shoot, there are outside the box ways for your home to make money. If you dont own, youre renting, so that can be a huge +/- cash-flow difference. Some people pay more in rent than they would on a mortgage payment. In addition, youre emotionally and financially tied to the property so its easier for you to stay motivated to maintain it.

4. Stimulus Stuff? If youre buying right now, there are a number to incentives for first time home owners and those eligible for VA loans. These incentives are however, slowly becoming extinct and politically unpopular. Its not a great idea to expect the stimulus money to be around for much longer.

5. You may be able to borrow against your equity and deduct the interest payments on the loan. Sort of like double dipping on your debt, you have access to the same debt-reduction incentives that people struggling to make payments have.

6. If your property increases in value over time, you may make a profit when you decide to sell. And some or all of your profit may be exempt from federal taxes. There are a number of things that this is contingent on, but in many cases, the profit your see over time is more actualized than in a capital gains situation.

7. Homes in certain markets can drastically improve in a few years. With low prices out there right now, there is bound to be some appreciation out there, and someone is going to get rich. The get-rich-quick schemes are dwindling, but the get-rich-in-ten-years opportunities still abound.

8. Its possible to rent out a primary residence. IRS tax laws give preferred treatment when you sell a rental property if you lived in it for at least 2 of the last 5 years, but you have to make sure you fall into the right category.


I really think that considering your home an investment is the way to go, but yes, there is another side to the coin. Roger Nusbaum of Seeking Alpha, argues that unless youre in your home for only a few years, you shouldnt think of your home as an investment. See his recent blog here. His argument would have been very solid before the housing bubble, but now it holds less water.

A few of the things you have to think about are: 1. You will have to pay taxes on your property, 2. Your money in now tied up and is not available for anything else in fact, it can be tough to sell and to get your money back if you need it, and 3. As weve seen recently, theres always the chance that the property can decline in value. This third point is a smaller concern right now; market prices are an unprecedented low and you can expect the value of a property to go up some in the future. To find out what markets are prime for recovery and for investment, visit www.SmartZip.com. Overall, in this day and market- its best to consider your primary property an investment.