Even when I was very young, I was fascinated with studying money and how it worked. Luckily, my best friend’s mom was (and still is) a very successful business owner. When I had the right opportunity, I would ask her what to do next with my career and money.
When I graduated from business school and started working, I asked her, “What should I do next?” She said, “Buy a house”.
After working in accounting for several years, I asked her again, “What should I do next?” She said, “That accounting work you are doing, start doing it for yourself, and not someone else”. So, I started my own business.
These two pieces of advice have both worked out very well. I obviously write quite a bit about owning a business, but I wanted to write about the first money advice I was given, “Buy a house”.
But aren’t interest rates too high?
I know you might be thinking that the rates are way too high to buy a home, but remember, over a considerable period of time house prices always go up and up, there have been crashes, but good investing is almost always a long-term move not a short-term move. Waiting for the perfect moment to buy is also never recommended in Investing 101. No one has a crystal ball.
Nothing speaks higher than personal experience. You can read articles and pontificate, but what has happened in someone’s life, where the real-world dollar amounts have fallen, is what is important. The proof is in the pudding.
Here Are a Few Reasons Why Buying a Home is Still a Great Idea:
1. Our CPA firm has prepared thousands of tax returns. 90% of the home sales we see in the personal tax returns have huge gains. These are home sales gains ranging from $100,000 to $500,000. These gains relate to houses bought several years ago, to houses bought decades ago.
2. The IRS lets you exclude $250,000 of your personal residence sale gain when filing single on your personal tax return. This means you pay no taxes on a gain of $250,000 or less. For a married filing married filing jointly couple, the IRS excludes up to a $500,000 gain. This is one of the best IRS tax rules. There are not many physical items one can sell without paying taxes.
3. A person or a family must live somewhere. Why pay the sunken costs of rent expense? It’s better to pay down a loan on an asset that will greatly appreciate over many years and sell at a huge gain, rather than just lose money paying rent.
4. Rent has gone up significantly in cost. I can’t speak to other cities, but from talking to many people, the minimum rent for even a small one-bedroom apartment is $2,000 per month in Woodstock, GA
5. I can speak from personal experience, that buying a house has been one of the best financial decisions I ever made. In a 10-year period, we went from our starter house to a much larger house. The gain on the sale of the 1st house produced a huge down payment on the 2nd house.
Follow this strategy, and it can work for you too.
Call Josh Simpson, the Veteran CPA, for a FREE 30-minute consultation: 678-353-3296