The Single-Family Home Tax Shelter Myth
- Thread starter Martin Gale
- Start date
I just used calculator from that site provided by Old Trader and found that only benefit to own if you are in a high TAX bracket.
If you are in a low tax bracket you are at break even with renters,real benefit is homeownership.
I used $1500 rent, 25K down 400K purchasing price. 15% tax bracket keeps renters at break even.
If you are in a low tax bracket you are at break even with renters,real benefit is homeownership.
I used $1500 rent, 25K down 400K purchasing price. 15% tax bracket keeps renters at break even.
You can live very well and not be one step away from BK. Unfortunately most people live highly leveraged. They dont see it as a problem. Funny thing though ... those people with extreme leverage seem to come and go while the folks that live comfortably using sensible fiscal discipline seem to endure .....
maverick,
are you a renter??
surfer
are you a renter??
surfer
its forced savings aspect that make it advisable to buy in most cases even if the numbers favor renting.
my parents were farmers. they never made a dime over living expenses their whole life. if they had rented they would have retired broke but since they bought they were able to sell the land and live off that money. the land value had increased 600% over their lifetime.
my parents were farmers. they never made a dime over living expenses their whole life. if they had rented they would have retired broke but since they bought they were able to sell the land and live off that money. the land value had increased 600% over their lifetime.
One thing you guys are overlooking is that when you buy, you lock in the "price". Renting, you have exposure to increasing rents. Over a 30 year period I would think that would be a singnificant amount.
I think this thread also overlooks that not everyone or location is the same. When I was appraising, I noticed in that in some areas you could rent a nice house for a fraction of what it would cost to buy (based on 20% down, 30 yr fixed). This was largely due to investors who were banking on future appreciation and not just the cash flow. Over the long, I would say owning RE is much better than renting, but in some cases it makes sense to rent.
I think this thread also overlooks that not everyone or location is the same. When I was appraising, I noticed in that in some areas you could rent a nice house for a fraction of what it would cost to buy (based on 20% down, 30 yr fixed). This was largely due to investors who were banking on future appreciation and not just the cash flow. Over the long, I would say owning RE is much better than renting, but in some cases it makes sense to rent.
"Over the long haul" perhaps yes. However, in this nomadic culture we live in these days, it's "the in between" that can be a killer. The consequences of a nomadic, housing "arbitrage" culture are just starting to be felt. What happens to all of these people who live in Phoenix or Las Vegas or most of Florida, etc, etc if/when they bought a property in the past 1-2 years? Has anyone seen the sky inventory of homes on the market in these places?
So let's just assume someone had the misfortune of actually buying the highs in one of these markets and, God forbid, they didnt actually want to live there for 30 whole years. I mean it's not unreasonable that someone might want to move before the 30 years are up on the mortgage. What happens when they try to sell into a soft market? What if they have to move for any number of different reasons?
Why is it that all the home vs. renting advocates are too insecure to actually illustrate the numerous obstacles to home ownership if you don't actually stay situated in one place for the duration? Instead, we hear the littany of benefits.
(Oh and FWIW, for all you guys who think that no one has ever lost significant money being a home buyer in the US, why don't you take a look at Buffalo, NY? The place has hundreds of homes for sale in the low 5 figures).
So let's just assume someone had the misfortune of actually buying the highs in one of these markets and, God forbid, they didnt actually want to live there for 30 whole years. I mean it's not unreasonable that someone might want to move before the 30 years are up on the mortgage. What happens when they try to sell into a soft market? What if they have to move for any number of different reasons?
Why is it that all the home vs. renting advocates are too insecure to actually illustrate the numerous obstacles to home ownership if you don't actually stay situated in one place for the duration? Instead, we hear the littany of benefits.
(Oh and FWIW, for all you guys who think that no one has ever lost significant money being a home buyer in the US, why don't you take a look at Buffalo, NY? The place has hundreds of homes for sale in the low 5 figures).
this is priceless for someone like me.....I love HGTV and work around my house on a weekly basis..as a mtter of fact i know im old cuz i like doing this better than going to happy hour any more.....
and while enjoying this my house has increased over 100% for sure ..and thats on the very low side....think about it i put 20 k down 5 yrs ago paid my mortgage as if renting and now have about $200k in equity...