The Cons of Purchasing a Luxury Home Over Renting
A multi-million dollar home comes with plenty of financial baggage.
Purchasing real estate has long been regarded as the wiser decision over renting. It makes financial sense too, in that mortgage interest and property can be deducted from their taxes. Additionally, they can also build equity at the same time throughout the course of their homeownership. However, when it comes to expensive and luxurious properties, you may want to mull your options before you essentially waste your money.
A luxurious piece of real estate will demand a large mortgage, depending on your finances, and the interest rate could work against you over time. Most homeowners can deduct their mortgage interest payments from their income taxes. But, with multi-million dollar homes, it may be a different story. Be sure that you consult with a real estate agent prior to closing the deal to determine the amount of capital you’re going to be investing.
Depending on how much you’re willing to put down on cash, your mortgage interest can be relatively high – and sometimes non-negotiable. This is why it’s recommended that you have the necessary funds to even begin looking into a luxury home. Without that, you’re looking at high monthly mortgage payments along with the slew of property taxes that can accumulate to a large amount.
The Bottom Line
Rather than purchasing a home right off the bat, you may want to consider renting as an option. You’ll pay much less over the course of your stay, and many luxury homes don’t necessarily need to be bought to experience the amenities of homeownership.
Kuba Jewgieniew is the CEO of Realty ONE Group, a real estate firm that will simplify the entire process of buying or selling a home. For more information visit them online.