What is Price per Square Foot?

Price per Square Foot is a common measure used to compare the relative value of real estate properties based on their size and price. It is calculated by dividing the sale price or asking price of a property by its total square footage. Price per square foot can vary widely depending on factors such as location, condition, and amenities, and is often used by buyers, sellers, and appraisers to assess the market value of properties.

A primary residence is considered a homeowner's main dwelling primarily because it is the home where they live most of the time. It is typically defined by various criteria, including the amount of time the homeowner spends there, its location in relation to the homeowner’s place of employment or family, and the address used for tax purposes. Recognizing a property as a primary residence carries several benefits, both financially and legally.

Criteria for a Primary Residence

**1. Physical Presence:

• Time Spent: Generally, a property qualifies as a primary residence if the homeowner lives there for more than half the year. This is often quantified as the homeowner spending at least six months and one day per year at this address.

**2. Legal and Official Documents:

• Registration: The address of the primary residence is typically used for voter registration, driver’s licenses, and tax returns, reinforcing its status as the homeowner’s main dwelling.

**3. Location:

• Proximity to Daily Activities: The primary residence is usually conveniently located in relation to the homeowner's place of employment, schools for children, and other daily activities.

Benefits of Having a Primary Residence

**1. Tax Advantages:

• Mortgage Interest Deduction: Homeowners can deduct mortgage interest paid on up to the first $750,000 of mortgage debt, which can significantly reduce their taxable income.
• Property Tax Deduction: Property taxes paid on the primary residence can also be deducted, subject to certain limitations under tax law.
• Capital Gains Exclusion: When selling a primary residence, homeowners can exclude up to $250,000 ($500,000 for married couples filing jointly) of capital gains from their income, provided they've lived in the home for at least two of the last five years before the sale.

**2. Lower Insurance Premiums:

• Homeowner’s Insurance: Insurance rates for a primary residence are typically lower than those for vacation homes or investment properties, partly because the homeowner’s presence tends to reduce the risk of major damages and theft.

**3. Legal Protections:

• Homestead Exemption: Many states provide a homestead exemption that protects a primary residence from creditors and can also provide a break on property taxes. This exemption only applies to the primary residence and not to secondary homes or investment properties.

**4. Financing Benefits:

• Favorable Mortgage Terms: Lenders often offer lower interest rates and better terms for mortgages on a primary residence compared to loans for investment properties or second homes. This is because the risk of default is perceived to be lower when the homeowner resides in the property.

**5. Residency and Domicile:

• Establishing Legal Domicile: For state income tax purposes, your primary residence helps establish your legal domicile, which can be beneficial in states with lower or no income tax.

Conclusion

Considering a property as a primary residence is not just about where a homeowner lives; it also involves significant financial, tax, and legal implications. These benefits make it financially advantageous for homeowners to accurately establish and maintain a primary residence. They provide substantial savings and protections, enhancing the appeal of homeownership and offering tangible rewards beyond mere occupancy.