Let’s say you have completed The 5 obstacles to getting your VA Guarantee Home Loan and you currently own your home. These are the 3 most important factors, to take into consideration to getting you rich or wealthy over time.
One, your property is currently earning you approximately 6% every year.
For example lets say you bought your home for 200K on a 3.2% 30 year fix. Even though you are paying your mortgage which is roughly $1,300.00 a month, you are also earning $1,200.00 a month providing your property increases at 6% annually.
Therefore if you look at the big picture you are really paying $100.00 to live in your house and here is the big kicker, you are using non taxable money to do it. Your Basic Allowance for Housing (BAH).
Two, the non taxable income Basic Allowance for Housing (BAH) that you are using to pay your mortgage, which is the $1,300, out of that $700 goes towards interest and $600 goes towards principal.
Here are your second big kicker, the $700 interest you are paying per month adds up to be $8,400 after twelve months.
However you are allowed to use that as a tax deductible against your base annual pay.
For example if your base annual pay is $20,000 you will only be tax on $11,600 allowing you to get back more of your money when you file your taxes.
Thirdly here is where you will be making the bulk of your money.
Once you have lived in your house for two years and owned it for five years and decides to sell your property, you will pay no property gain taxes on the sale of your property.
Leaving you to go home if single with $250K and if married $500K, but there is a catch, you must be a resident of the state in which the house being sold is located.
Nevertheless this is not legal tax advice, contact your tax professional for legal tax and financial guidance.