Tax Day Unusually Nice

It isn’t a record, but I think 80 degrees is on the warm side for tax day in Colorado Springs. It was a perfect chance to get the hot tub drained, cleaned a refilled, and the warm dry sun felt very good. Rain and snow are in the forecast for the next couple of days, so we’ll enjoy it while we can!
Speaking of tax day, I thought I would plug one of the tax benefits of owning a home. The obvious interest deduction is the one most discussed, but actually the tax free gain on the sale of your home is sometimes more important. This is because the way the tax tables work these days, sometimes using the standard deduction instead of itemizing is the best thing anyway, depending on the situation.
The tax free sale is generally interesting for everyone (current recession excepted), because even when homes are appreciating slowly, in the long run they are still appreciating, and when you sell, it is one of the few things you don’t get taxed on (with some limits, of course). A $200,000 house that eventually sells for $250,000 after 5 years or so may have a $50,000 tax free gain on it. While you can often beat the appreciation rate with other investments, you usually cannot beat the leverage allowed (with only 3% down, this could be only a $6,000 investment!), and after taxes, that money is harder to match. Plus you get to live in it the whole time!

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