There are several reasons why buying before the end of the year could be a great investment.
- Tax benefits:
Mortgage Interest Deduction: To take advantage of this deduction for 2012, buy before the end of the year. Even though your deduction will be small since it will only be on 1 month of interest, it's better than nothing. You can deduct on any mortgage debt up to one million dollars.
Mortgage Insurance Premium: If you have PMI because your down payment was less that 20%, you may be eligible for a deduction. The deduction would be on the interest paid on your PMI payments. The caveat is that your adjusted gross income must be below $100,000. Incomes over $100,000 will have a reduced deduction of 10% for every $1000 over the adjusted gross income limit. This caps the deduction out at $109,000 AGI.
Mortgage Points: Points paid on your mortgage are fully deductible in the year that they're paid. This can be quite a savings, especially on loans over $500,000.
2. Low Interest Rates: Due to the uncertainty of the "Fiscal Cliff", it's hard to know how interest rates will be affected. They are currently at record lows so, the thinking is that they can only go up from here. For maximum savings, buy now! There has never been a better time to use other people's money.
3. Funding your Down Payment: If you're thinking about using any investments for your down payment, now's the time. The Bush-era capital gains tax cuts are only in effect until the end of 2012. In January of 2013, they will rise from 15%-20%. This 5% rise in rates is a return to 2003 capital gains tax rates.
4. Home prices are on the rise: Due to shrinking inventory and an improvement in the Marco Island home market, prices are starting to rise. These prices will only continue to increase as the market keeps improving. It's highly unlikely that prices will ever be this low again.
All of this news is very exiting if you've been sitting on the fence and are contemplating a move to Marco Island. Buy before the end of the year and save yourself some money! For more information on the Marco Island real estate market or on any homes or condos in particular, contact The Boyle Team anytime!