Is housing appreciation all profit?

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People often think of the increase of the price of their home as all profit, like buying a stock at 60 and selling it at 70, where you made 10 bucks a share. Now people think they bought the house at 200 thousand and they sold it at 300 thousand, they made a hundred thousand dollars. No you didn’t. Your profit is not the difference between the price you paid and the price you sold at, except maybe for tax purposes. Why? You had a host of other costs – closing costs, mortgage interest, property taxes, property insurance, maintenance, repairs and possibly even dues for a homeowner’s association. Factoring all that in, as well as the cost you paid when selling, you may not have ‘made’ any money. But what you likely did get is a rebate on a large portion of, or perhaps all, of your shelter costs. With renting, there is no such rebate. That money is literally gone.

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With home ownership, you’ll get some of those outlays back when you file your taxes and even more when you sell the home. Just don’t call it all profit.