what is owed on it). Discounting certain blip periods, such as the 2006 housing bubble burst, home prices in the U.S. appreciate nationally at an average annual rate between 3% and 5%. Remember, though, home value appreciation in different metro areas can appreciate at markedly different rates than the national average. Improvements increase your home’s value. A homeowner can also increase a home’s value through home improvements, thus both making your home more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and appeal, while potentially boosting its value. Be sure, however, not to over-improve for your community. If you add lots of features/amenities that are not present in the average home in your neighborhood, the house might not appraise when you decide to sell. You will have gotten enjoyment from those updates, but you might not get that money back on the sale. Tax advantages of home ownership. There are significant tax benefits associated with buying a house, both at the time of purchase and for the duration of time you own the home: • Homestead exemption. Many states exempt owner- occupied homes (homesteads) from a portion of the property tax amount that would normally accrue. As of the writing of this book, for instance, Texas exempts the first $100,000 of a home’s value from county property tax assessments, so a $200,000 home in Texas is taxed as if it were worth $100,000. Comal County offers an additional 20% exemption on top of the $100,000, making it taxed as $80,000. School districts and other taxing entities may have additional exemptions. Your agent help you find this information.
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