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Renting is playing it safe, but is it playing it smart?

Renting is playing it safe, but is it playing it smart?Everyone knows that renting has some advantages over owning your own home.  Most homeowners will agree that the benefits are pretty limited.  To me, renting just seems like an inability to commit.  Owning your home can provide both financial and emotional security.

The financial security is pretty easy to understand.  In the current market, it is quite likely that you can own a home that is bigger and nicer than the current rental you have for less money.  Not only is the cost to own less (in many cases) than the actual rent you are paying, but there are also tax benefits to owning your home that reduce the total cost even further.

Concerned that you don’t have enough money for a down payment?  Most landlords require first and last month’s rent, plus a security deposit.  Would it surprise you to know that it may not cost any more to get into a home as its owner?

The emotional security is a little more difficult to define.  The quote on the left is from the KCM Blog and sums it up pretty well.  I agree with the author’s sentiments.  Americans will be better served by living their dreams instead of playing it safe.

If you are interested in exploring the dream of home ownership, please call me at 661.375.REAL (7325) or email me today.  Let’s talk about what will help you achieve your dream.

As always, thanks for reading.  If you found some value here, please share, forward, etc.

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Why Buy? More Distance from Neighbors…

There are lots of arguments both in favor and against buying your own home. Take a look at this quick video for an example of being a little further away from your neighbors might be a benefit.

If you think it might be time to leave rent behind and look into buying your own home give me a call at 661.375.REAL (7325) to discuss it.  Shoot me an email or text, whatever works for you.

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Thanks for visiting!

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Six Tax Benefits for Tehachapi Homeowners

Most folks know that there are tax benefits to owning a home in Tehachapi or Kern County as compared to renting.  You might be surprised at how much those might be worth.  Please remember that you should always consult your tax professional when making major financial decisions.  That said, check the list to see where you can save money on taxes by owning a home.

  • Mortgage Interest Deduction Probably the most well-known tax deduction related to homeownership.  You can deduct the interest paid on up to a $1 million mortgage for your principal or second home.  This deduction is most substantial in the early years of a mortgage loan since most of the payment at that time is for interest.  As time goes by, you are paying less interest each month and more toward the principal.
  • Property Tax Deduction The amount you pay in state and local property taxes can be deducted on your federal income tax return.  If you are renter thinking to yourself, “Yeah, but I don’t have to pay those taxes either,” think again.  You are paying those taxes, you just don’t see it itemized on your rent bill.  You can be sure your landlord has figured out how to get all of his costs covered.
  • Deductible homebuying expenses You can also deduct various closing costs ordinarily involved in a home purchase.  These  include loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.
  • Home equity loan deduction Homeowners can borrow up to $100,000 against the equity in their home and deduct the interest as an itemized deduction.   You can use the money for any purpose, such as paying off high-interest credit card debt.  In contrast, the interest on credit card debt is not deductible for individuals.
  • $250,000/$500,000 home-sale exclusion The greatest tax benefit of owning a home  might come when you sell it at a profit. Homeowners who lived in their home for two of the five years prior to its sale need pay no income tax on a substantial amount of their profit — $250,000 for single homeowners and $500,000 for married homeowners who file jointly.  This exclusion can be used once every 24 months.
  • 14 days of free rental income Another little known tax benefit of owning a home is that the owner can rent it out for up to 14 days during the year and pay no tax at all on the rental income.  In contrast, a renter who sublets his or her rental must pay income tax on all the rental income he or she earns.  Thinking about a European vacation for a couple weeks?  Rent your house and use the money to help pay for the trip.

What about the tax benefits of renting?  Well, there really aren’t any.  The only home-related deduction for renters may be for the self-employed or certain employees that use a part of their home regularly and exclusively to conduct business.  Oh yeah, you can take that deduction as a homeowner too.

Thanks for reading!  If you enjoyed this article, please share it with your friends and feel free to share your thoughts below.

Sally Lawrence

Have questions?  Ready to leave rent behind?  You can reach Sally via phone or text at 661-375-7325 (375.REAL) or email Sally@HomeSalesSally.com

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Top 5 Hidden Costs for Tehachapi Renters

It’s not unusual for folks to think that it is cheaper to rent than it is to buy.  Admittedly, it may be true in some cases.  What is also true is that many renters overlook hidden costs of renting.  Those hidden costs can be enough to tip the scales toward homeownership all by themselves.  Were you aware of these top five hidden costs of renting?
  • Equity When you rent, you are lining the landlord’s pockets and creating equity for him.  When you decide it’s time to move, you have nothing to show for the time you have paid rent.  When you buy a home, if you remain in the same place you will eventually own it and have no further monthly payment to make.  Even if you move before you have paid off the mortgage, you have reaped other benefits during the time you owned the home.  Consider also that usually a home’s value increases over time, but even in a down market when it may not increase, you can still own a home free and clear.  When you are renting , you will never have a month when the landlord says, “You’ve been paying for this long enough, now you own it!”
  • Income Tax Savings When you rent a home, if your income is above a certain level, you will be paying more in taxes than you would if you owned your own home.  Homeowners can deduct the cost of property taxes and the interest on the mortgage.  Just like your landlord is doing now.
  • Storage and Security Renters often have more possessions than will fit comfortably in the home they are renting.  That usually means it is necessary to rent additional storage space.  The cost of the storage rental needs to be counted as part of the monthly housing payment.  Another issue with these kinds of storage needs is security, especially for off-site storage.  When you store all your belongings on your own property you have much better security.
  • Improvement Costs Most long-term renters will at some point decide to paint, replace flooring  or undertake other projects to make their home livable.  Unfortunately, those costs are never recouped for renters.  In fact, those kind of improvements only serve to improve your landlord’s investment.  In the worst case, a landlord may even require that the tenant pay to return the property to it’s original neutral decor.
  • Lost deposits Anyone who has rented more than a couple apartments is aware of just how easy it is to lose your security and pet deposits.  It doesn’t seem to matter how careful you are, the landlord pretty much has the final say.

If you are considering buying your home, consider talking to Sally Lawrence.  “HomeSalesSally” can help you decide if it’s the right choice for you.  Call 661.375.REAL or email Sally@HomeSalesSally.com today.

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What’s one of the biggest mistakes Tehachapi renters make?

You found the perfect home to rent in Tehachapi, you signed the lease and moved in. Everything’s great, right? So what is the one thing you forgot? How about tenant’s insurance?

The landlord needs to have an insurance policy to protect damage or loss of the building you are renting. But you need to have insurance too. You, as the renter, need to have insurance to protect your stuff (“contents” in insurance parlance).

The most important aspect of a tenant’s policy is fire coverage. If you’ve just moved in a month before Christmas, it would be horrifying to lose everything you own because of a Christmas tree fire, wouldn’t it? Or. how about another common cause of house fires, candles? Maybe you wanted to be a little warmer, so you used a space heater and had it set too close to the curtains.

The result of all those unfortunate situations is that without insurance, you likely lose all your stuff and your place to live. A contents policy will let you start over without going too deeply in debt to do it.

There are lots of other reasons to make sure you have a tenant’s policy. Call your favorite insurance agent to find out more. If you don’t have a favorite agent, contact me and I’ll help you find someone.

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What’s the key to your new Tehachapi home?

Have you thought that you will always be stuck in a rental?  Lots of folks feel that way, primarily because they don’t understand that there may be choices.  Keep reading to find out how to own the keys to your own home.

Have you always dreamed of owning your own home?  The option of home ownership may be available now even though it wasn’t a few years ago.

If you have a job and are comfortably paying rent of about $800 per month you may indeed be able to purchase a home of about $150,000.  Even better news is that $150,000 will buy a lot more today than it would have a few years ago.

So why wait?  Contact us today to find out how to make the transition to owning your home.  To find out how soon you can leave rent behind call  661-375-REAL (7325), fill out the form to the right, or email NoRent@HomeSalesSally.com today.

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