OK smartie pants, you want to get technical? The house itself is capital investment the costs of owning/maintaining it are expenses. Just to be clear.
Bob Magness… Wealthiest man in CO. (in 96) Founder of TCI cable
Net worth +1 Billion
Died in November 96 of brain cancer. Age -72
Died with a simple will drafted back in March 96
His estate plan…
- 15 Million to Charity (U of D)
- 55 Million to 2nd wife - Sharon age 48
Remainder of estate to his two sons: Kim, 45 & Gary, 43.
Sons have a Problem: They were faced with a 550 Million tax bill
What happens next.
-Wife Sharon Sues for 50% of estate
-Sons sue executors selling 30 million shares of TCI back to TCI for low price and giving up valuable voting rights.
- Shareholders sue TCI for deflating stock price
Then what happens (2 years later)
- Sharon settles ($100 Million)
- Sons receive $124 Mil. From TCI and retain voting rights on shares
- The “Unexpected Tax Windfall” from the Magness estate will allow for a $45 Refund to every taxpayer in the State of Colorado !
- Federal Government……$500 Million
- Lawyers earn Untold MILLIONS !!
Believe it or not, he was less than 24 hours away from signing a new estate plan.
Now did it all go to taxes? nope… did 45% of it… yes… does it matter where the rest went? it didnt go to his heirs… and it would have, tax free mind you… had it been life insurance.
No, you don’t.
Saying that “you pay the price of the house in interest” is a fucking moronic statement.
First of all, you are talking about carrying a 30 year loan to term. Ok, fine. So what? If I pay $200k in interest on my $200k house and own it for 30 years, it doesn’t matter if it doesn’t appreciate at all. Time value of money. $200k today is worth a heck of a lot more than $200k, 30 years from now.
Why else is that retarded? The interest is tax deductible… is your rent? Didn’t think so. Guess what, your rent is going to cover someone elses mortgage, plus their “carrying costs” plus their profit. You aren’t exactly comparing apples to apples if you say “hey, I can live in this 2BR gables apartment for $600/month, why would I want a $1k/month mortgage”
Why are you talking about other ways to make money? You said “That said, you pretty much always lose money when you buy a house.”
Even if you want to talk about other places to make money, you’re again leaving out plenty of facts about the differences in tax law on the profits, the lack of benefit relating to paying interest on non-principal residence real-estate, etc, etc etc
I go back to my original statement, people that don’t think, even in this economy, it makes sense to own your primary residence (if you can afford to do so) don’t know what the fuck they are talking about.
Next thing I know you’re going to tell me I should pay off my 2% student loans because of how much I’ll end up paying in interest :fail:and I can’t even write that interest off…
^valid.
Well, for NYS taxes, you can. Been awhile since i have done taxes, so rememebr exactly how in NY it is handled any more.
Haha.
At least you see my point.
woa woa woa. rent is tax deductible? is this above and beyond the standard deduction, like tuition paid?
not a deduction, think its handled like a credit. and its only partial of what you pay. I no longer live in NY and I forgot the form. You should beable to find it off NYS finance/tax website
you mean $200k today is worth more than $400k 30 years from now?
the $200k in principle and the $200k in interest on top of that principle…
you need 100% appreciation (quite possible) plus additional appreciation to cover all associated costs over 30 years… (much less likely).
saying that home owners are losing money is not the same as saying its a bad investment in the case of a primary residential purchase, just so we’re clear on that.
in contrast however, if you ran a business that cost you $200k to start up, paying reasonable interest over 30 years and incurred moderate running costs over that time with no cash flow of any kind you go out of business in a few months… but because it’s your primary residence it’s not a bad investment even if the economics of it are identical.
AGAIN, lets not forget about the $500,000 in rent you would have burned and never seen again.
It is funny how people can continually forget that even though it is a huge part of the equation.
AND the tax advantages.
Next argument: Is the world flat?
I guess it can be put this way. You HAVE to live somewhere. Compared to paying rent, there are huge advantages to owning and when it is all over, you can get a portion of your money back.
I know my money can be invested in other places better, but when compated to renting for a lifetime. Its an investment.
shit, BED beat me to it.
Rent is not necessarily a factor. Lots of people don’t pay rent.
Stay at home. Live in family owned properties, rent a room with Joe for $400 a month with a sick garage…
the cash flow difference on a monthly basis between a mortgage and renting, if you live reasonably, can be significant… i could save $600 a month renting a decent apartment as opposed to owning. Invested at say 5% per year over 30 years and measure that agaisnt the net earnings from a mortgaged home.
It’s also alot easier to leverage cash than equity.
renting apts. = no maintenance, incidentals etc.
you’re doing the roof a couple times, your driveway, windows, doors, kitchen, bathrooms etc. etc. at least once or twice each over a 30 year period… or you could just move to a nicer apt. 
anyways… lets not be arguementative for the same of arguement. i really don’t have any interest in this conversation anymore.
I would love to know what percentage of people in THE USA that actually work for a living don’t pay rent.
If I had to guess I would say .01%.
Are you fucking serious?
Lets all move in to our moms basement is your argument.
I’m not even going to reply to this joke any more…
Keep you home mortgaged to the hilt… put your money in a guaranteed vehicle earning a guaranteed rate of return (see CD’s back in the 80’s, lol) … the lack of equity in your house still grows as the value of the house grows…
Ie. a house worth 100k with a 100k equity line is worth 100k still if it grows to 200k its worth 200k
The same house with NO mortgage is still worth the same 200 at the end of the term…
The 100k balance the guy had on the first house is in a cd earning 15%…
30 years later… his house is worth 200, and his 100k in an equity line that was in a 15% cd (dont ruin my example realists) is worth over 5 million…
Do that with rent.
do you know how many millionaires I know that rent in Florida and dont have a homestead here? :bloated:
ah ethnocentricism… you have it in spades.
Go to Europe and see how people live.
Homes are multi-generational. Every family i visited in Austria (related to by marriage) had at least 2 and sometimes 3 generations under a single roof.
Its more the norm. Same with China, India, Russia… you know… 85% of the world’s population and growing in number and influence, as opposed to Canada and the US… But hey, you’ve got it all figured out man.
Of my parent’s generation… all of them own homes and do not live in them and yet do not pay rent in the homes they live in. The same is true for many of my colleagues and friends.
you guys need to expand your scope of experience.
My bad I assumed were talking about The USA were the economy is completely different.
Yeah, if I lived in China I would probably live with my parents, etc.
Yeah, I really want to bring back some hoes to do some freaky shit and run into my grandparents. :eyebrow:
^lol. this thread is funny. There are a lot of mexican, haitian, and guatamalen families here that have 15-20 people living in a 3 bdrm ranch…
they work off the books doing landscaping and what not, and save every penny until they can buy their own home (cash) and repeat the process…
I didnt think we were talking about THAT here though.
I thought this thread was comparing renting vs owning a home for the typical american family/ NYSpeeder.
what’s typical?
being more specific… my parents and all of my aunts and uncles live in smallish, newer homes that they do not own and do not pay rent for.
i am moving my wife’s mother into our house in 2010. We’re fixing up the basement for her. She will then own a home but live in a home that she does not own and does not pay rent for.
There are millions of people like that. My uncle in Austria works for Magna designing concept cars in a very senior role and lives with his son and parents in an expanded property in Graz… not comparable to your haitian / guatamalan bullshit.
My uncle is a millionaire and lives in the same building as his mother… i lived there for 2 years with them out of university… no rent and made great money…
There are no laws that say you have to rent an apt. or buy your own home and treat it like an investment and lose your ass on it (or not). It is entirely a function of choice and priorities…
Justifying a residential mortgage as a good investment because you want to bring hoes home and not run into your grandparents???
but hey, maybe some creative math with solve this whole issue for you.