A February update from the CALIFORNIA ASSOCIATION OF REALTORS® features an examination of renting versus buying. The analysis shows that current California housing market conditions, coupled with lower home prices and attractive mortgage rates for qualified buyers, make a strong and compelling case for homeownership. Check out the following comparisons:
HOMEBUYER – The monthly housing costs associated with buying a median-priced home of $301,430 is $1,590.
RENTER – In comparison, the median rent on a three bedroom, two bath apartment with renter’s insurance in California is $1,810.
CONCLUSION – Buying a home would save the homeowner $220 per month, and over $2,600 a year, when compared to renting.
HOMEBUYER – Existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. The tax implications for a household earning $63,430 a year that purchases a home with a 20% down payment and finances the mortgage at the current rate of 4.62% will receive a tax deduction of over $14,000 in the first year of ownership.
RENTER – The renter household earning $63,430 a year will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts.
CONCLUSION – The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.
For more information or a copy of the full report, please contact an Alain Pinel Realtors sales professional.
** This is a general summary of this costs associated with renting versus buying, and does not constitute tax or legal advice for any particular situation. As always, it is important that you consult with your tax or financial advisor.