Federal subsidies could help Salt Lake renters build equity for a home purchase | Urban Living
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Federal subsidies could help Salt Lake renters build equity for a home purchase

Urban Living



The National Association of Realtors published data recently showing that Salt Lake City homeowners gained an average of $238,240 in equity over the past decade. The report added that almost 72% of Salt Lake's citizens own their own home.

This national trend for homeowner equity is great if you actually own, rather than rent, because it's like having a savings account that you can draw on or build upon over the years. It's why we as Realtors encourage people to buy, rather than rent, if possible.

Besides building equity, owning a home has tax advantages as mortgage interest is one of the few write-offs the IRS allows for single people or couples without children. That write-off can save tens of thousands of dollars each year in taxes!

I always suggest for folks who don't currently own and who file a simple 1040 tax return to make a copy so they can scrawl on the copy. Then, look for the "mortgage deduction" section of the form and add in, say, $2,500 times 12, which might be interest you pay on your loan for a year, or roughly $30,000. That alone is quite a deduction and look how it changes what you may get back from the IRS!

Federal subsidies (in the form of IRS mortgage interest deductions) have long been used as a vehicle to encourage homeownership for Americans because they're effective. But, as the opportunity for homeownership disappears, those who didn't get into a home before 2020 are being left behind.

Perpetual Housing Fund is a Utah nonprofit that wants to turn renters into owners. Their idea is to build apartments and then share in the equity with the renters to save to purchase later. PHF says, "Seventy-five percent of the annual cash-flow, asset appreciation and debt reduction generated by our projects will be distributed into the hands of our tenants. There are no commitments and no time limits. The longer they stay the more they earn—these funds can be used to fund a small business, go back to school or put a down payment on a property of their own."

Basically you rent, get a share of the profits of the apartment building and then can use your newfound wealth as a down payment to buy a condo or home. You could also use the profits in case of a medical emergency or even start a small business.

Some of the buildings proposed would be condos and so renters, if they liked the place they lived in, might be able to purchase that unit or another in the building.

If you're interested in leasing a PHF property, check for information or sign up to be among the first to know when their projects begin accepting applications.

For more information, visit perpetualhousing.org.