The Great Benefits of Equity Sharing
Equity sharing can be an arrangement in which all of the players win. Equity sharing contracts are drawn up with the specific terms agreed-upon by the co-owners. The non-resident co-owner will often make the down payment, while the resident co-owner pays the mortgage payments, insurance, property taxes, and repairs,
The biggest benefit for the nonresident co-owner is the tax loss deduction (mostly from depreciation) against ordinary income such as salary, dividends, and interest. Other advantages include part ownership in a property with almost no monthly expenses and a management-free investment. The biggest risk for the non-resident owner is that the resident may not make the monthly payments, resulting in difficulties clearing title and removing the resident.
The benefits of the resident owner include part ownership in a home that will probably
appreciate in market value, involves little or no cash investment up front, and tax deductions for part of the mortgage interest and property taxes, The resident owner has few risks, with the exception of extraordinary expenses, such as a new roof.
Interest rates will soon be rising to over six percent so now is the time to come up with a plan B in your home purchase plan. When interest rate rise the banks often provide more options when it comes to home loans which is something to keep in mind while you are saving.
For more options give Bob Santucci a call at 707-888-9115. Bob is your local Realtor and works at Wright Realty and Investments in Sonoma County. Wright Realty and Investments is a Full Service Real Estate Brokerage with a strong foundation in real estate finance and investing.