First-time homebuyers are facing a serious problem when it comes to buying a house. While the acceleration may be cooling somewhat, there are still record-breaking rises in home prices. Recent data shows for the first time in the U.S., median home prices surpassed $400,000.

Several factors are likely to continue this trend. There are a lot of motivated buyers, limited housing supply and low mortgage rates. Inflation is pushing prices up for essentially everything, including homes. Low mortgage rates allow buyers to buy more than they would be able to ordinarily, so they can get involved in heated bidding wars.

Sellers are also staying put because they don’t want to jump into a highly competitive buying market, limiting the supply of available homes even more. Homebuilders can’t get the materials they need, and even if they can, there’s a labor shortage. Where does this leave first-time buyers or any buyer?

What Does It Mean to Be Priced Out?

An important part of real estate investing for some people, a 1031 exchange lets you swap one investment property for another. Then, in doing so, you’re deferring capital gains taxes. The name of the exchange comes from Section 1031 of the Internal Revenue Code.

IRC Section 1031 includes many different elements that a real estate investor needs to know and understand before using it. An exchange, for example, can only be made with like-kind properties. The IRS also has rules limiting the use of 1031 exchange for vacation properties, and time frames and tax implications can create problems if you aren’t aware of what they are.

The following is a general overview of a 1031 exchange and what to know.

What Is It?

If you’re thinking about becoming a homeowner any time soon, there are tax benefits to buying. In particular, tax deductions are one way to reduce your tax bill and income. Tax deductions are different from credits. Credits are money that gets taken off a tax bill. You can think of them somewhat like a coupon. A tax deduction reduces your adjusted gross income or AGI, reducing your tax liability.

The following are key tax benefits and things to know for homebuyers or possible homebuyers.

Mortgage Interest Deduction

When you’re applying for a home loan, you face the option of getting a 15 or a 30-year mortgage. It can be a daunting decision, and thinking about something 15 or 30 years down the road is overwhelming. There are pros and cons to both options, which are compared below.

The Basics

The basics of a 15-year mortgage include the fact that it’s going to be paid off faster and will probably have a lower interest rate. However, with a 30-year mortgage, you’re going to have lower monthly payments. So which is right for you?

One might think that a home loan is a home loan. And generally speaking that's correct. Lenders review a loan application and begin the approval process. The lender looks at qualifying income, credit and assets among other things. But overall the process is the same for most all types of home loans. But with a rental property, there are some things that are different when compared to a mortgage for an owner occupied unit.

Getting a mortgage can be more challenging when you're self-employed, but it’s not impossible. For W-2 employees, getting a mortgage can mean showing your tax records from your employer to verify your income.

For approving someone who is self-employed, lenders may be concerned that your income isn’t steady enough to make your monthly payments. Some lenders also prefer not to work with self-employed people because there’s more paperwork.

Why Is It More Difficult?