The MATH of Buying vs Renting (deductible, employee, range, purchasing)

[mathjak107]

Originally Posted by UNC4Me

The last article I saw on homeownership had it at 63.4%. Must be factors other than the deductibility of mortgage interest at play when people make the rent/buy decision.

higher income folks tend to trip the amt as well and except for mortgage interest and contributions most deductions go bye bye once you pass phase out . without real estate taxes they too may not be able to itemize .

[KathrynAragon]

Originally Posted by mathjak107

statistics say other wise.

only higher incomes way above averages get to itemize for the most part .

a typical first-time homebuyer, financing 95 percent or less of a median-priced U.S. home (around $200,000) pays less than $12,000 in mortgage interest and property taxes annually. That is not enough to hit the itemization level. Even with other deductions that bring the taxpayer over the $12,600 limit, the tax savings are minimal.

In 2012, 77 percent of the benefits went to homeowners with incomes above $100,000, while close to half of homeowners with mortgages, most of them middle- and lower-income families, receive no benefit from the deduction, according to the Center on Budget and Policy Priorities.

with rates even lower today the numbers are even worse for those able to itemize .


them's the actual facts .

You're only a first time home buyer one time in your life.

And 27 percent of homeowners with incomes below $100,000 DO receive tax benefits from owning a home. And about 20 percent of American households have an income above $100,000. So roughly speaking, about half of Americans would probably benefit tax wise by owning a home.
Why Is a $100,000 Income No Big Deal Anymore? | Bankrate.com

Them's some more actual facts.

[UNC4Me]

Originally Posted by mathjak107

it is still pretty low in either case when you figure that folks are mislead to believe that owning generates all kinds of money back and they do not realize how income level dependent it is as far as itemizing .

lower rates have made things even harder .

Again, you are assuming that money is the only metric used when people contemplate renting vs. buying. And you're doing so from your experience of renting in NYC where rent control takes the sting out of frequent and large rent increases.


My daughter just bought a 2 BR/2.5 BA townhome and her all monthly cost is about $125 less than the rent on her 1 BR/1 BA apartment. She had lived in that same apartment for 3 years and had seen her rent increase about 6-7% each year while her annual raises were averaging about 4%. Does it really matter if she gets to write off a dime in interest? Pray tell how she would be better off as a renter?

[mathjak107]

money is the only aspect being debated . there are loads of other issues non monetary where owning wins hands down

[UNC4Me]

Originally Posted by mathjak107

higher income folks tend to trip the amt as well and except for mortgage interest and contributions most deductions go bye bye once you pass phase out . without real estate taxes they too may not be able to itemize .

And again, what is at play when people (like me) know all this and still choose to buy instead of rent? Our house is paid for so no interest deduction here. It's valued at about 650K. Could I sell it, move to some crappy apartment and invest the rest? Sure. Would I? Not hardly. Because the value of privacy trumps the value of whatever earnings we could realize by freeing up the money. That may not matter to you, but it does to me and there's nothing wrong with either of our positions.

[mathjak107]

Originally Posted by KathrynAragon

You're only a first time home buyer one time in your life.

And 27 percent of homeowners with incomes below $100,000 DO receive tax benefits from owning a home. And about 20 percent of American households have an income above $100,000. So roughly speaking, about half of Americans would probably benefit tax wise by owning a home.
Why Is a $100,000 Income No Big Deal Anymore? | Bankrate.com

Them's some more actual facts.

According to a study by The Wharton School at the University of Pennsylvania, mortgage interest deductions for households with incomes between $40,000 and $75,000 average just $523, while households with incomes above $250,000 enjoy an average write-off of $5,459, or more than 10 times as much.

much of america see's no or little benefit .

them's more facts

[UNC4Me]

Originally Posted by mathjak107

money is the only aspect being debated . there are loads of other issues non monetary where owning wins hands down

Fair enough, but even if we forget about everything but money sometimes owning still wins. Not even close to always, but definitely sometimes.

[UNC4Me]

Originally Posted by mathjak107

According to a study by The Wharton School at the University of Pennsylvania, mortgage interest deductions for households with incomes between $40,000 and $75,000 average just $523, while households with incomes above $250,000 enjoy an average write-off of $5,459, or more than 10 times as much.

them's more facts

Wharton proved that the higher the income, the higher the mortgage and the higher the write off? WOW. Who could have guessed?

[mathjak107]

of course buying does win many times . my only argument is with those who make broad statements like renting is throwing money away or renters are losers .

that is false .

[cdelena]

I like owning because I have control. But financially I don't think it is a sure bet over renting. I have owned five homes over 45+ years and I am sure I made no money on four of them and little on the fifth. Maintenance on top of taxes is all it takes to be a loser on many properties.