Establish Your Financial Goals For Ownership

Living in the house means you don't have to pay rent any more. But these additional considerations can also shape your financial strategy for home ownership. Will you rent out part of the property to capture cash to pay down the mortgage early? Renting a room, garage, storage space or even a slice of the yard for boat or RV storage (if that's allowed by local zoning laws) can stream enough income to you to help you quickly build an emergency fund and to pay off the mortgage early. Will you operate a business from the property? The home office deduction is modest and requires meticulous paperwork, but it might be worth it if you capture enough cash. A larger space - say, a custom woodworking shop - might pay for itself through the deduction. However, if you expect to turn part of your property into a business operation, you must first clear it with the local zoning authorities, the homeowner's association, and your property insurer. Be sure to get all relevant business and operational permits. Permits are always cheaper than paying fines, especially fines levied because annoyed neighbors called authorities. Will you need space for an additional generation to live with you? It can be much cheaper to have elderly relatives or untethered new college grads living with you than to pay for their apartments. However, you might have to build ramps and widen doorways for wheelchair-bound residents, or add privacy features for twentysomethings. You will also have to decide if and how to charge rent and utilities fee to cover household expenses.
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