I completely agree. I own, and don't really care to share walls at this point in my life, but overall I think home ownership is way overrated in the US.
Yep and it's funny to me that people seem to think that by renting you avoid condo fees or insurance for example - those are just tacked onto the rent. If I buy a house and pay $600/month for principal and interest + say $100/month for insurance + say $70/month for an HOA that does lawn, etc. (which some homes have) What do you think I am going to rent the house out for - $600??? More like $800 min of course. With apartments, it's basically the same thing - they put their cost of insurance and maintenance into the rents. JJacksET4
And with renting you never own anything. I do think, in some cases, owning is overrated, hard to move for job change and such, but rents aren't cheap with so many ousted out of their homes, they have risen. I was surprised though, my trading buddy told me a fellow trader rented a house in La Jolla, CA for 3k that would cost 10k for mortgage because they have too much inventory and are trying to get something for it. But I look at it this way, if I move to a slightly less desirable city, not bad by any means, and downsize to a 1600 house, for wife and I, I could buy it for 180k in this down market and sell mine for around 315k, at 180k I could pay cash if I want. The 2 bedroom I mentioned for 1500 wanted a 15 month lease and doesn't come with garage for only 1100 sf. BTW they wanted $70 for a background check for both of us. I said 70 bucks WTH? You are making money off that like people overcharging for S & H when you buy something.
Just don't look around Beverly Hills! http://www.rentals.com/Apartments/California/Beverly-Hills/52725/ 2 2 1 1380 $5,600 Per Month Yikes! JJacksET4
I am not a tax guru by anymeans but wouldn't having a small biz for deducions in your rented housing make up for the mtg deduction? Ownership other than for a business (rental units) where someone else pays your mtg is for suckers. It seems. In anything other than a raging bull market.
No, wouldn't make up for not having a mortgage deduction. If you claim a deduction for a home business, you can claim only the portion of the dwelling which is used exclusively for the enterprise, plus a proportionate deduction for utilities, maintenance and upkeep. Also, taking a home deduction is often a red flag for the IRS to audit. All in all, barely worth the trouble if at all in many cases.
Debbie, I am not a tax guru either, but here is the difference: Let's say I buy a house with payments of $2,000 per month - mostly interest in the first years (as it always is) - assume I pay $20K in interest for the year. If you have a small business in a rental house, I don't think it is legit to deduct (under normal circumstances) 20K for rental for the business. For example, I think you can deduct what is reasonable - do you use the entire house for the small business? All bedrooms? The kitchen? Living room? Garage, etc.? For example I know a guy who did what you suggest, but he rented an Apartment for say $1500 a month and "rented out" the office room to his small business for maybe $400/month - so nowhere near the same deduction. As far as I understand it, you can only deduct what would be reasonable if you were to rent a small office for your business for example - it would be unlikely you would have to pay $20/K year for a small office. JJacksET4
Thanks for the advice. I still don't get this mtg interest deduction thing. If I pay 20k in interest, I can deduct 20k from my earned income? I get that but you are forgetting the depreciation of the asset itself. Houses are in great surplus unprecedented surplus. Prices will never come back and will likely keep dropping. What's the advantage of a deduction with a rapidly deprieciTion asset you had to borrow to buy?