|‘Should I Rent or Buy?’||| Print ||
|Thursday, 14 February 2013 13:16|
By Phil Hunt
Special to the Forum
Q: I currently live in an apartment, have a good job making about $90,000 a year, 30 years old, have no bills and am trying to plan my future very carefully. I read your column every week and value your opinion. My question is: Is it prudent for me to buy a home or should I continue to rent? I realize this is not a simple question but I would like to have your thoughts on the matter.
A: It is indeed a complex question, since I do not know your total financial picture and I have no idea about your plans for marriage or children. I am not a financial planner, tax attorney, accountant or retirement counselor; I can only answer from my perspective as a real estate broker.
It must be quite confusing to you “Gen-Xers” to make such a life-changing decision — to buy or not to buy. The Baby Boomers all seemed to know that owning their own home was a given; it was how they grew up and it all seemed right.
It made your parents feel comfortable to own their own home. But for this current younger, more mobile, more affluent generation, the goal is not quite as defined. A nice home? Yes. But whether to rent or own… not so clear.
Here are a few things to look at: Owning your own home gives you tax benefits, and the interest on the loan and property taxes are deductible from your income. It has always been considered by many to be a good thing. However, only your tax professional can say if it is so for you.
The tax benefits are still valid but who knows what their future may hold, considering the “tinkering” that goes on in Congress and the State Legislature on our tax laws.
One can have profound pride in homeownership as compared to renting. Seldom have I seen real pride of ownership in rented property.
Also, some look at buying a home as an investment.
We are experiencing a rapid escalation in prices of property right now and it is believed by many in the real estate industry that this will continue for the next five years.
The first rule of economics: Buy low, sell high. If you continue to rent, you will forever be indebted to the property. If you buy, you are only 15 to 30 years away from being out of debt. Your accountant can better run the numbers for you to compare the appreciation and the tax benefits of ownership as compared to the investment of the same amount of money into other investments such as stocks and bonds.
Tax deductions are a part of the equation, too.
At the risk of sounding self-serving, my advice is to buy a property. The advantages could be many, such as customizing the property to your own taste and never having to worry about being given a “notice to move” by the owner.
However, there is also a downside: stopped-up sewers, roof leaks, other repairs, changing neighborhoods and changing job opportunities.
I bought my first home when I was 19, and I have never been sorry. The fact that I was an owner has seen me through some tough times.
In the final analysis, only you know what makes you happy; it may have nothing to do with money.
Nothing here should be construed as tax or legal advice.
Phil Hunt is a real estate broker in Castro Valley. Fax questions to 583-5480.