Owning a home has been the American dream for well over a century. It’s a lofty goal that many aspire to because it is often seen as one of the greatest ways to build wealth that can be passed down to the next generation.
To reach those wealth goals, it’s important that homeowners understand the value of getting more out of homeownership to maximize property value. While there are numerous ways to go about this and nearly as many opinions on the best strategy, here are a few key points for your own financial planning.
Knowing Your Property Assessments
Your home’s value can be looked at in two main ways: market value and assessed value. They’re each different, but both factor into your home’s overall financial value.
Assessed value: According to Investopedia, “Assessed value is the dollar value assigned to a home or other piece of real estate for property tax purposes.” It’s calculated by several factors, including location and similar homes in the area. A lower assessed value means lower property taxes for the homeowner.
Market value: This refers to how lenders and real estate agents determine your home’s value on the real estate market. In short, what would a prospective buyer be willing to pay for the home?
Several factors come into play, such as zip code, the overall health of the real estate market, as well as your home’s size and condition.
Homeownership and Long-Term Financial Planning
For many people, homeownership plays a huge part in their financial planning for the future. For starters, a mortgage forces you to budget your finances, and that monthly payment can be thought of as an investment. While an increase in a home’s value isn’t guaranteed, most homes do increase in value over the life of the mortgage.
While a home isn’t a liquid investment along the lines of a savings account, many homeowners downsize in retirement and use the profit from the sale of their home towards buying a smaller second home or for retirement leisure, such as travel.
Tax Benefits for Homeowners
A number of deductions await homeowners each year when tax season rolls around. While the rules that the IRS lays out concerning these are far too detailed to cover here, several potential tax deductions and benefits for homeowners include:
- Mortgage interest
- Home upgrades
- Property taxes
- Mortgage Insurance
- Home office expenses
- Capital gains
Keep Up With Maintenance
There’s no getting around it: caring for your home can be an expensive hassle for even the most skilled DIYer. The more you take care of your home and keep it looking nice both inside and out. However, the stronger its market value will be whenever you decide to sell.
Going a step beyond general home maintenance, upgrades such as deck or patio additions, energy efficiency upgrades, or landscaping improvements can add major value to a home.
There’s also a lot of truth to the real estate saying “location, location, location” when it comes to maximizing home investment. Homes in desirable areas tend to retain and only increase in value.
With a prime location in Dripping Springs, inviting amenities, and beautiful homes, it’s easy to understand why so many homebuyers are choosing the Caliterra community. To find your home here, contact our team today.