For most people, buying a home is the single largest investment they will ever make. Because buying a home is such a big event, many people avoid the opportunity altogether and choose to rent instead. When considering renting, just remember that owning a home has many financial benefits - especially in Charleston's real estate market.
One of the biggest financial benefits is income tax deductions. You can reduce your taxable income by deducting the property taxes and the interest of your home mortgage from your gross income. So, if you pay $6,000 a year in interest and $1000 a year in property taxes, you can subtract $7,000 from your taxable income.
Another benefit of owning a home is that you control how much you pay for housing every month. By choosing a fixed rate mortgage, you know that your housing payment (your mortgage payment) will not change in the years to come. So, if you choose a 20 year fixed rate mortgage, your monthly payment would be the same in 20 years as it is now. If you choose to rent instead, you can certainly expect the rent price to go up significantly in that same amount of time – especially in Charleston’s rental market.
The rental market here in Charleston brings me to the third benefit of owning a home. Depending on the area, rent prices in Charleston are relatively high, especially compared to other areas of South Carolina. Right now a one bedroom and one bath apartment in West Ashley (one of the more affordable areas close to downtown and to the beaches) is about $550 a month, and in downtown Charleston it is about $800. The cost of renting in Charleston makes owning a home a good financial investment. If you are going to spend that much money every month renting, you may as well go ahead and put the money toward an investment that will give you your money back in the future (plus some money).
Another big financial benefit of owning a home is appreciation. The average appreciation for homes in Charleston is roughly twelve to fourteen percent. This number is much higher than many other cities. And, even with a slower market, this percentage is higher than many other types of investments. Appreciation motivates investors to buy lots of real estate and then rent it out. These investors don’t make their money off charging high rent – instead, they count on the homes’ appreciation for profit.