If you keep in mind that your home is one of your biggest investments, you will think about it in a different light, whether you are buying, renovating, keeping it or selling it.
Home ownership is a big part of the “American dream,” and our government provides incentives for homeowners in the form of investment benefits and tax savings. Here are some guidelines to optimize your investment in your home:
Don’t buy the prettiest house on the block unless you are prepared to compete to get it and willing to pay top dollar.
Don’t buy the most expensive house on the block. Research other properties that have sold recently in the neighborhood and choose a property that is somewhere in the middle price range.
If you are renovating, don’t overbuild. Don’t overdo for the area or the property. For example, spending $75,000 on a master bath renovation in a house that is worth $750,000 is overdoing it.
Update your home now. Housing decor goes out of style just like clothing fashions. If your home has a dated look, don’t wait until it’s time to sell to update it. Do it now and enjoy it while you live there.
“Hot button” items are subject to change. Fifteen to 20 years ago, a wine cellar would have been a bad investment; now it’s becoming standard equipment in expensive properties. So, if you like wine, build your cellar now.
Your home is your bank. If you need cash, it’s easy and relatively cheap to get a home equity loan and you can deduct the interest payments on $100,000 of the loan, no matter how you spend it.
Don’t stay in one house too long. Your present house may be too small or too big, have too many steps or require too much lawn care. If so, consider transferring your investment to a townhouse with a patio, or an apartment with a balcony, so you can still step outside when you feel like it. Then, when you want to go away for the weekend or the week, lock it up and go.
Transfer your equity from your residence to your investment property, tax free. Buy an investment property where you want to retire. When you sell your residence, take advantage of the $500,000 exclusion of gain on a principal residence for couples ($250,000 for single people) and move to the investment property, which then becomes your principal residence. This is a great way to avoid some or all of your capital gains on both properties.
As always, check with your accountant, before you proceed with any plans that involve taxes.
Founded in 1985 by Donna Evers, Evers & Co. Real Estate is home to 100 licensed real estate professionals with decades of combined experience, who enjoy access to a first-of-its-kind Agent Resource Center. The agency is the largest woman-owned-and-operated residential real estate firm in the area and a member of Unique Homes Affiliate Network, Who’s Who in Luxury Real Estate and FIABCI, the largest international real estate organization in the world.