There’s nothing quite like a home that you can truly call your own. A place where you can have the gleaming hardwood floors you’ve always dreamed of, a space to cultivate your own vine-lined patio and freedom to customize your property to suit your needs. These are the images that immediately come to mind, for many of us.

Contrast this with a rental where you could be subjected to the whims of your landlord, increasing rental costs, no tax benefits, no equity build-up and maybe the feeling of impermanence.

Some of the biggest advantages of owning a home are not idealistic or romantic and are very practical – these are the financial advantages of owning a home:

• Tax Deductibility - You can deduct the cost of your mortgage loan interest from your state and federal income taxes.  Since interest generally will account for most of your payment during the first half of your mortgage, the savings can be significant.  Some of your costs at the time of closing (including prepaid mortgage interest) can be taken as deductions on that year’s income tax return, and points paid up front at the time of closing represent additional mortgage interest and may be taken as a deduction.
  
  
• Tax Deductibility of Property Taxes - You can deduct all of the property taxes you pay.
  
  
• Appreciation Potential - Real estate is considered a good long-term investment because it usually appreciates in value. Additionally, borrowing potential can increase as the value of the home appreciates.
  
  
• Capital Gains Exclusion - When it’s time to sell your home the amount of capital gains you have to pay (based on difference between the cost basis of your home and the sale price) is reduced.  A homeowner can exclude up to $500,000 per couple if married and filing jointly, or $250,000 if single or filing separately for homes that have been the taxpayer’s principal residence for the previous two years.
  
  
• Capital Gain Treatment - Congress allows preferential tax treatment on gains from capital assets held for more than one year. This would be important for a homeowner who has gains in excess of the allowable exclusion.
  
  
• Equity Accumulation - Mortgages are designed to pay the interest for the time that the money is in use, as well as to retire the principal debt over a period of time. This payment plan means that part of the payment each month is for principal reduction, which adds to the equity build up as market values increase.
  
  
• Personal Enjoyment - Pride of ownership is a valid reason for wanting to own a home. You can personalize your home while enjoying the financial benefits.

For the best evaluation of your financial situation and advantages to you of homeownership, consult your financial adviser.  He/she will be the most qualified to discuss the financial consequences of a home purchase decision, as well as help you to establish a plan that will achieve your home ownership goals.