Owning a home has always been a major part of the American Dream. Just a generation ago, making the final payment of a 30-year mortgage was one of the biggest achievements of adulthood. People put down roots and lived in essentially the same town for their whole life.

Today, things are a little different. People move more frequently and over larger distances. In fact, studies show that the average person now moves every 7 years. Younger demographics are also more likely to rent their home for many reasons. Whatever your reason, renting or buying might be best for you. Below are some of the advantages of each!

Renting

The flexibility that comes from renting a home is obvious. Selling a home can take time, while renters are in a better position to simply pick up and move if an opportunity comes along in a different city. Newcomers who have just relocated to a new area will also find renting first a good idea as they learn about their new community.

The no-maintenance lifestyle is appealing for renters. The landlord is typically responsible for maintenance, upkeep and repairs. For some, removing these concerns is worth the inability to paint a wall blue or build an outdoor kitchen.


Buying

  • Equity - Almost everyone has a monthly housing cost, whether it’s a mortgage payment or a rent payment. While renters are paying their landlord’s mortgage, home owners are building equity in their asset which can put cash in your pocket at selling or be borrowed against when needed.
  • Tax Benefits* - Mortgage interest is still one of the best tax deductions available. The IRS allows home owners to deduct from their gross income certain costs associated with home ownership such as: mortgage interest, property taxes and closing costs. Additionally, when the home is sold, a single seller can take up to $250,000 of profit free from capital gains tax (a married couple can keep $500,000) as long as the property is their primary residence.
  • Hedge Against Inflation - Most mortgages today have fixed monthly payments or very low scheduled increases. This means that the home owner will pay the same amount for housing for the duration of the loan term. Meanwhile the rental market is subject to not only inflationary pressure but the laws of supply and demand. In many areas it’s quite common for a renter to spend more on rent than their neighbor next door who owns their home.

Owning vs renting your home is a personal decision. Determining the right situation for you and your family depends on your lifestyle and financial goals and needs. If you have questions or are interested in purchasing, call me today and let me help you achieve your own part of the American Dream!

*This article is for informational purposes only and nothing contained should be considered tax advice. Please consult your tax professional for information regarding your specific tax situation.