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You're paying one pocket with the other and sitting in judgment of others? I'm sure the IRS would love to have your name.
There's nothing illegal about what I'm doing as it isn't considered a separate business. Its a simple budget trick that allows me to see the money that I'm making from my 'investment'.
You were kind and didn't assume the home would sell for any more than paid, in 2019. It's funny, almost, that to make this example even more real, you should have added reasonable gains (average) per year. But they definately DON'T want to hear that!
I was giving a worst case scenario... chances are that the house would be worth more money. Any added value in 2019 would just make my argument stronger.
There's nothing illegal about what I'm doing as it isn't considered a separate business. Its a simple budget trick that allows me to see the money that I'm making from my 'investment'.
I thought you said you understood numbers...
Depends on how you set it up... good for you if you found a loophole.
heres what everyone is missing here that makes this debate go on and on and on... your missing the true cost of ownership and housing... housing costs are not a 3 year thing, a 5 year thing or a 30 year thing. housing costs go on for a lifetime and never stop compounding
think about a renter, his cost of housing over a life time is the rent he pays every month for life..the cost of renting just dosnt stop compounding because he moves, rather the total grows and grows and grows over a lifetime.
now i keep saying a house is a consumption item, not an investment and heres why.
the costs of housing for a homeowner over a lifetime are not just i paid this and i sold for this, or my house is now worth this but rather the cost of housing is all the costs and expenses that go with the privilage of owning a home.
your taxes,mortgage interest,expenses,maintaince ,repairs,renovataions, extra insurance over and above what renters inssurance cost , landscaping, a roof, snow removal ,etc you home owners can probley extend this list into tomorrow, i know i could. the list goes on and on
all the expenses compound year after year after year just like a renters rent does.
as time goes on its apparent that your total cost of housing increases and increases and may and probley will exceed the value of the home decades later.. the longer you house yourself and your family the higher your housing costs accumulate. you can sell and move but regardless the next house keeps the meter running and gets added to the first house as well as if your trying to compare renting to owning and seeing how housing costs compare thru a lifetime you need to compare everything and allow the actual costs of housing you and your famly to keep compounding.. you wouldnt stop counting the renters rent just because he moved.....
in most cases the amount you spent on your home and the costs for the privelidge of owning that home and housing you and your family over a lifetime will be above the value of your home especially in a high tax area. in nassau or suffolk county 8-12,000 a year is the norm, and so you will actually be at a loss if sold as time marches on.. the question is over decades of life which gives you the smaller loss , renting or buying and paying what may be a decade of higher costs but having the value of the home .................. by the way if you sell the house and rent you cant count those profits yet from the sale as you still have a lifetime of housing costs to add in from renting now.
now of course every area is diifferent so the cost of buying vs renting is different. initially here in new york you can rent for 1/3 to 1/2 less then buying...now renting is great in the early years but your costs arent fixed and so inflation pushes the rent up around 2-3% a year here....
on the other hand a large part of buying is fixed and thats your mortgage or if you paid cash its your house cost and other parts like taxes and expenses go up and are variable and increase over time.
many years out in our area you reach a point where rents increased enough to be the same as the cost of buying and so the relationship shifts. now buying became cheaper as rents go up from here, especially because the homeowner has certain expenses offset with those writoffs that bring him down in housing costs compared to the renter paying the same amount.
if you were tracking your true cost of housing in both cases you will find that both cases probley give you a negative worth decades out as associated costs overtake the home value and the renter in his case spends rent ..it all boils down to which is the smaller loss over a lifetime.
if the renter invested all that extra cash he didnt spend buying he may very well come out a head... its just theres no answere here as everyones personal situation and numbers over a lifetime of housing costs are different...
there is no clear cut winner its only which one costs less over a lifetime
Last edited by mathjak107; 01-12-2009 at 04:26 AM..
a good analogy is the cost of feeding your family ... if you live in most apartment houses you have a choice in nyc,you can buy a refrigerator on your own or use the refrigerator the landlord gives you and is included in your rent... in either case its the actual cost of the food that you buy that determines the food costs for you and your family ... over a lifetime those food costs are going to probley out weigh the costs of the refrigerator .
lets suppose that if you buy a refrigerator that you picked a model that increased in value over time so you had something of value at the end.
whether you come out a head or not in either case is higly unlikley, it all boils down to who spent the least. if you watched your food costs as a refrigerator renter and invested the money you didnt spend on the refrigerator you may come out ahead, on the other hand if the buyer of the refrigerator had the value of that refrigerator go up enough they would offestt some food costs and lack of not investing the refrigerator money since they bought.
as you see there is no answere, its all about consumption and not investing in a refrigerator...
i hope all the above seems logical because my 1 finger i type with is sore from all this
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