Would it make sense to purchase a home before travel?

NedRN · Jan 20, 2016

Purchasing a home before you begin traveling does confer several benefits. For one, it really helps to solidify your tax status: known as having a tax home in IRS lingo. Traveling away from a tax home makes you eligible for special tax treatment of housing, per diems, and travel (mileage) when working away from home which increases your take home pay - around $10,000 net annually for most travelers.

Buying a home is the way most Americans become wealthy. It is not a good move to simply buy a house for potential investment value, better that you really want to live in it for at least five years. It may increase in value, but for most, it operates as a forced savings account with monthly payments required.

Getting a mortgage now may prove easier with a staff job. Per the above mentioned tax benefits, your annual taxable pay may be reduced while your take home pay goes up. Some banks rely heavily on your tax return or W-2 to qualify you for a mortgage and may decline to grant you a loan when you become a traveler. This can be worked around by by shopping other banks for those willing to consider all sources of compensation so it is not a huge deal, but it will be easier now.

Most homeowners with a mortgage end up itemizing taxes because of the interest. Travelers who already itemize because of a mortgage may be able to benefit further by itemizing certain business related expenses that are not reimbursed by the agency. These include travel miles including commute miles at the assignment and milage for the trip to the assignment (subtracting first the agency payment). You can also utilize the maximum GSA per diem rates for your assignment location and if higher than the agency per diem rate, deduct the difference. Since these deductions are subject to filing thresholds, your benefit here will be relatively minor at best.

There is a lot that goes into buying a home and I won't go into that, other than location really does matter. Buying in a good area, or a gentrifying area is more likely to hold or increase its value and worth paying more. I will suggest considering a home suitable for having a roommate. A roommate's rent (you do have to declare the rent on your taxes) will cover a good bit of your mortgage, insurance, and tax payments. They also serve as a default house sitter and mail screener.