Should You Rent or Should You Buy?
Things being equal it's almost always better to own your home rather than to rent. After all, you build equity and get to write off your mortgage interest. And if you meet the guidelines, when you sell you'll be eligible for one of the best tax breaks around.
There are many issues that influence whether buying or renting is right for you. That said, home ownership has a significant tax advantage. When you sell married couples can earn up to $500,000 in gains on home sales tax-free, while singles get $250,000. The chart below demonstrates the amount of accumulated money renters are paying that could be building equity in their own homes.
Renting Is Hazardous To Your Wealth! |
LOOK BELOW! To see how much you are losing every year! |
Your Monthly Rent | After 3 Years | After 5 Years |
$500.00 | $18,000.00 | $30,000.00 |
$750.00 | $27,000.00 | $45,000.00 |
$1,000.00 | $36,000.00 | $60,000.00 |
$1,200.00 | $43,200.00 | $72,000.00 |
$1,500.00 | $54,000.00 | $90,000.00 |
$2,000.00 | $72,000.00 | $120,000.00 |
$2,500.00 | $90,000.00 | $150,000.00 |
$3,000.00 | $108,000.00 | $180,000.00 |
$3,500.00 | $126,000.00 | $210,000.00 |
Other Factors
Of course, buying a home isn't strictly a financial decision. For most folks, the thought of constantly worrying about losing their security deposit every time they pound a nail or paint a wall isn't particularly appealing. Here are some other things to consider before making your purchase:
This may sound simplistic, but first and foremost you should find a neighborhood and a home that you just plain like. "You're not going to wake up in the middle of the night and say 'Wow! Look at my tax deduction!'" .
Moreover, you should check on the sales price trends of homes in that neighborhood. If it looks like the area is declining in value, then avoid commitment: You may be better off renting.
Finally, don't forget that even with the tax-breaks of home ownership, you will still be incurring out-of-pocket costs that you wouldn't encounter as a renter - from the cost of ripping down wallpaper to repairing a leaky roof. So before you buy, estimate how much those costs will be. After all, you don't want to live hand-to-mouth - even if it is in your own home.
Why Are You Still Renting?
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About the Author
David C. Recker is a Top Producing Realtor licensed in North Carolina. Dave works at RE/MAX Point East and serves Edgecombe, Nash, and Wilson counties in North Carolina.
Dave's website, http://www.ncrealestateweb.com/ , is one of North Carolina's top real estate websites and you can read frequently posted Articles and Blogs by Dave at NCRealEstateWeblog.
