Buying Tips, Part Two |
|---|
There are many forces that come in to play when you
make the decision to buy, rather than rent. It is not as simple as
comparing a rent payment to a mortgage payment. You need to consider
tax issues, insurance, interest, maintenance, appreciation, etc.
The chart below is a simplified example of how homeownership can
actually cost LESS than renting.
|
| |
Rent |
Buy |
|---|
| Loan Amount |
N/A |
$150,000 30 year mortgage at 6.5% |
| Monthly Payment |
$850 |
$948 |
| Yearly Payment |
$10,200 |
$11,376 |
First Year Income Tax Savings*
(25% federal / 8% state tax bracket) |
ZERO |
-$3,696 |
| Money Spent in One Year |
$10,200 |
$7,680 |
|---|
|
There are, however, more benefits that are not listed in this chart
including appreciation, earned equity, the enjoyment of homeownership,
the social benefits of homeownership and stable housing.
According to the National Association of Realtors (NAR),
homeownership and stable housing contribute to:
- Higher educational performance and better behavior of children
- Lower community crime rates
- More household participation in civic affairs
- Better household health
* IRS CIRCULAR 230 NOTICE.
Any advice expressed above as to tax matters was neither
written or intended by TheYellowSign™ to be used and
cannot be used by any taxpayer for the purpose of avoiding
tax penalties that may be imposed under U.S. tax law.
If any person uses or refers to any such tax advice in
promoting, marketing or recommending a partnership or other
entity, investment plan or arrangement to any taxpayer,
then (i) the advice was written to support the promotion,
marketing (by a person other than TheYellowSign™)
of that transaction or matter, and (ii) such taxpayers
should seek advice based on the taxpayers particular
circumstances from an independent tax advisor.
|
