The concepts of generational wealth and property ownership have long been a bit complicated, especially when it comes to their relationship to one another. Regardless of your experience with real estate and generational wealth prior, it’s completely possible to start from the ground up — or wherever you are in your journey — and build the generational wealth you’re looking to get started through home ownership. Whether you’re curious about the specifics, you already own a home or you’re in the buying process, here are a few things to know when building generational wealth through homeownership.
What Is Generational Wealth?
One of the most important parts of this conversation is defining what it means to have — and care for — generational wealth. Although many people have a picture in their heads about what generational wealth is, there is a much broader definition than you might expect. You don’t need to be wealthy to pass down generational wealth, as the term refers to any assets, property, money or investments that you can pass down to your children or other family members. Therefore, owning a home of any kind can be considered generational wealth if you keep it within the family.
One of the ways that owning property can help you accrue generational wealth is through saving money on the expenses of living long term. Even though owning a home comes with its own expenses, such as upkeep and maintenance in order to keep it in shape, owning property is an investment, as opposed to renting, which is an equation in which you never see your money again. Although renting is right for some people, owning a property ensures that you maintain at least some capital on your investment.
Not all property ownership comes with the opportunity for passive income, but if you’re looking specifically for an opportunity to grow generational wealth, finding a property that allows for passive income is the ultimate way to go, especially if you have a plan for that income to grow and develop over time. By renting out a unit on your property or even having a designated rental property, you can use it to accumulate generational wealth in addition to the generational wealth of owning the property itself.
One thing you may hear discussed frequently when it comes to the financial side of property ownership is property taxes. Even with property taxes, there are plenty of tax advantages to owning property, from tax credits to tax breaks, that can come as a result of owning different forms of property. Of course, those guidelines will differ between states and even counties, but it’s always a good idea to look into the way your taxes can work for you.
Building Generational Wealth
Although generational wealth might seem out of reach for many people, there are plenty of ways to build generational wealth for your family, and property ownership is one of the most practical options. Whether you have a rental space or a family home where you spend time together, generational wealth is about planning and thoughtfulness.