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IS HOME STILL GOOD INVESTMENT?
Is the purchase of a home still a good investment when the inflation rate drops to say 4%? It certainly is!
If you buy a house for $80,000 with a $20,000 down payment and the house appreciates at 4%, it will increase in value in one year alone by $3,200. This $3,200 represents a 16% return on your $20,000 investment. Sixteen percent is an excellent return. It’s hard to find an investment that returns 16% when the inflation rate is only 4%. It doesn't stop there.
If you are financing the $60,000 at (for example! 13%. you would be paying $7,800 in interest during the first year. Interest is an income tax deduction. For a person in the 30% tax bracket, this interest deduction has a cash equivalency value of $2,340. Add this to the increase in home value during the first year and you have a total of $5,540. This figure translates to a whopping 27.7% return on the downpayment investment. Property taxes are also a deduction which further increases the return. No doubt about it. A home is arf excellent investment.
If there is anything we can do to help you in the field of real estate, please phone or drop in at EILEEN M DAY, Realtor, The Clopton House, Washington, VA. 22747. Phone. 675-3400. We re here to help.
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