What are the benefits of renting versus buying?
The decision to continue renting or to buy can be a confusing one. Some people continue renting because of the perceived flexibility of moving almost as soon as you decide. Although moving before a lease is up can cost you money, some continue renting because they don't enjoy yard work and don't want the responsibility that goes with home ownership.
Here are some things to consider when choosing between renting and buying:
- Do you want to spend several years in a house and in a neighborhood?
- Do you enjoy lawn and garden work?
- Do you need flexibility to move suddenly to care for family or other reasons?
- Do you want to keep your assets accessible in the bank, or do you want to invest long-term in a home?
- Is personalizing your surroundings through paint or other cosmetic changes important to you?
Maybe the strongest reason for buying a home is the financial security you build as you pay your mortgage. There are short term and long-term tax advantages to homeownership. The mortgage interest and real estate taxes are tax deductible, which allows you to subtract part of your housing-related expenses from your taxable income, which could reduce your tax bill.
Other reasons to buy a home:
- It's a good investment.Investors say overwhelmingly that real estate can typically be a safer and better investment than stocks and bonds!
- Tax savings.Mortgage interest and property taxes are tax-deductible, making tax savings one of the biggest benefits of homeownership. This means that you could possibly pay less tax or you get a bigger tax return.
- Improvements add value.Unlike rental improvements, when you paint, make additions, or improvements to your home it increases in value.
- Buying builds equity.Buying a home is good use of your money. As you make payments over time, the equity increases. When renting, you get no return for your money. Once the money is spent, it's gone.
- Low interest rates.While interest rates are slowly going up, the nation is still experiencing record low rates which allows buyers to buy more house for their money at lower monthly payments.
- Capital appreciation.Unlike buying a car, or renting... homes (when taken care of) usually appreciate in value.
- More Space.If you've always wanted that extra room for an office or weight room...here's your chance. Renters typically live in smaller spaces...home buyers have more square footage for their money.
- The "owned" home is your castle.You control the decor. You can paint and decorate as you like. You can add to the size of your home and make improvements. You will not have to face rent increases.