David Allsteadt

Wednesday, 17 March 2004 11:41

Shelter your income through home ownership

We have all heard the old adage about the inevitability of death and taxes. But if you own a home, you have taken advantage of the greatest opportunity to keep more money in your pocket rather than sharing it with Uncle Sam.

What's hot in the stock market changes on a regular basis -- such as dot-coms and high-tech start-ups -- but placing your faith in home ownership has stood the test of time. And don't forget about the residual benefits of a roof over your head, the sense of community and the warm, fuzzy notion that your home is your castle.

Now is a good time to encourage family members who don't own a home to consider buying. Here are some reasons why.


Interest rates are still at historical lows, making owning a home a very real alternative to renting. In addition, many loan programs require little or no down payment or allow "gifting" of the down payment. There are groups that offer advice and assistance on putting together the cash required to get into that first home. Talk to your financial adviser about them.


Most homeowners can deduct property taxes and interest paid on their mortgage every year of ownership. In addition, most counties offer additional tax exemptions for home ownership for veterans, seniors, current military personnel and others. Call your county tax office to find out if you qualify.

Interest paid on a second mortgage may also be deductible if the total of the first and second mortgages is no greater than $1 million.


Single taxpayers owe no tax on the first $250,000 of profit from the sale of a principal residence. That goes up to $500,000 for married couples filing jointly. Again, talk to your financial adviser about how to maximize this exemption if you own a vacation property in addition to your primary residence.


Homeowners can borrow against the equity they have built up in their home. This can be used to improve your home, buy a car or pay for education. And you can deduct the interest from your federal taxes. Renters do not have this option.


Additionally, make sure you know your home's value. It's more than just another investment, but as with your other investments, knowing the best time to buy or sell can have a significant impact on your portfolio.

Talk to a real estate professional about the market in your area and ask for a comparative market analysis to keep abreast of what is selling in your neighborhood, for what price and in what timeframe. Then, consult with your tax adviser about the tax implications of your sale or purchase based on your situation.

There isn't necessarily a best time of year to buy or sell a home, but when you pay your taxes, it is a good time to take a look at your overall financial picture and decide how best to take advantage of the savings available to you. The more months out of the year that you are a homeowner, the more months of tax deduction you will have.

In the long run, home ownership offers much more than tax savings -- it's a tax investment you can live in.

David Allsteadt is senior vice president and CFO, Coldwell Banker Residential Brokerage. The company includes 27 real estate branches plus specialty divisions - The Condo Store, Builder Developer Services, Commercial and Corporate Relocation. Additionally, the firm offers mortgage, title and closing services through its affiliated companies. Coldwell Banker Residential Brokerage is a member of the NRT family of companies. For more information, call (404) 705-1500 or visit www.ColdwellBankerAtlanta.com.