Considering not ever owning a house again.

[feh]

Oh, and let's not forget capital gains. . .30% of a 90K gain would be $27000 in capital gains tax ( I guess, assuming I rent as a senior or move into a small modular or something). So, the illusionary gain at this point is $63,000.

In exchange for locking up my money? Is this really worth it?

I am not sure home ownership should be encouraged financially in this country.

Oh, I am sure I could swing a 15 year mortgage too and pay it down in 11 years.

As of today, capital gains on the sale of your home are excluded from taxes (up to a limit).

[jpg7n16]

As of today, capital gains on the sale of your home are excluded from taxes (up to a limit).

$250k per person (max 2 - married) and must have lived in the home as primary residence at least 12 months.

So if you're married, up to $500k of that gain could be tax free.

[jIM_Ohio]

$250k per person (max 2 - married) and must have lived in the home as primary residence at least 12 months.

So if you're married, up to $500k of that gain could be tax free.

The test for the 500k/250k deduction is more than live in house for 12 months.

There is a usage test and a live in test.

I believe its 2 of the last 5 years (730 days) for usage and 730 days for lived in (they do not have to be the same 730 days). The example which these periods might not be the same is if you rent to own, then turn around and rent property out before selling.

and you cannot have claimed the deduction in last 2 years

[elessar78]

No one has mentioned the advantage of mobility when it comes to renting. Homeownership can restrict your mobility if you don't live in an area where jobs are plentiful. My wife and I both have "portable" jobs and don't really love either our jobs or the area we live in. Whereas my wife's family owns local businesses and another is a farmer—they are not going anywhere. Their livelihood is tethered to this area, so it makes sense for them to buy a house.

But if you can't be sure you will or want to stay in an area for 5 years then it doesn't make much sense to buy, right?

I read an idea in a book by Ric Edelman about a decade ago and it still resonates today: don't buy a house as an investment. But it because you want to live there and in that area.

I truly think the ability to move to a different area/part of the country for a more lucrative job or one that fits your life/values better is undervalued. But if you find all those things in your current area, then by all means homeownership is a good option. I still worry that I'll find this "dream" turning into a millstone around my neck.

[wincrasher]

This period of uncertainty is hopefully temporary, but it's adding numerous variables that makes it quite hard for people to decide what to do.

It's quite possible to find rent that is lower than costs. It's also quite possible to find a real estate bargain that is way below true value. These may be fleeting. If builders stop building and all the foreclosures are cleared, we may find ourselves with rapidly escalating costs in 5 to 10 years time. Population growth marches on. The economy will eventually heal itself.

I feel no regret when I make my mortgage payment. My house is, by far, much nicer, larger and more energy efficient than anything equivalent I could rent. Was it a better investment than buying Ford stock in March 2009? Hell no. But I have a home that I like, neighbors that I like and trust and I'm free to change anything that I like. A home is more than a balance sheet calculation - there are the intangibles to consider.

[Scanner]

Well, I got 60K in my divorce settlement today.

We settled early so I am really weirded out right now. Very emotional day.

If I had a financial planner now, I'd be asking him/her what to do.

The funds are supposed to be in my hands within 10 days.

I then have 90 days to secure a residence (rent or buy).

Thanks to all for being with me through the most difficult and painful time of my life.

[MonkeyMama]

No one has mentioned the advantage of mobility when it comes to renting.

Another good point. I like home ownership because I have no need or want of mobility.

But how many people do we all know buying a house "for a year or two." Really no logic in that, most of the time.

P.S. Scanner - Good Luck!

[cypher1]

Well, I got 60K in my divorce settlement today.

We settled early so I am really weirded out right now. Very emotional day.

If I had a financial planner now, I'd be asking him/her what to do.

The funds are supposed to be in my hands within 10 days.

I then have 90 days to secure a residence (rent or buy).

Thanks to all for being with me through the most difficult and painful time of my life.

Sorry to hear that, in terms of divorce being finalized. I cannot imagine what that must feel like in terms of emotions going through your head right now. It seems my friends, friend's parents, exes, relatives, are all getting divorced around me. Hopefully it's for the the best on both sides. Only thing to do now is focus on your kids and yourself going forward, and stick to your financial goals. Best of luck!

[cicy33]

Here are my thoughts on both sides.

Home ownership - good because
1. can do to your house whatever you want
2. its yours (as long as you pay your taxes)
3. nobody can make you move

Home ownership -bad because
1. have to pay for your own maintenance
2. have to pay ever increasing taxes
3. if paying it out over 30 years, paying way more than house is worth



Renting is good because
1. don't have to pay own maintenance
2. can move whenever you want (providing didn't sign a lease)

Renting is bad because
1. Can't do whatever you want to the house
2. owners can sell, or not pay the mortgage and you have to move due to foreclosure
3. you are paying roughly the same amount as a mortgage but have nothing to show for it

Once you look at the good and bad that usually will help decide the option. If you don't want to be tied down, rental is always best. otherwise, owning is usually a pretty good idea. especially if you can pay for the whole cost or pretty close to it.

[disneysteve]

Home ownership - good because
1. can do to your house whatever you want

Unless there is a home owners association that sets all kinds of ridiculous rules. We had heard so many HOA horror stories that when we were house hunting, we specifically told the realtor that we would only consider houses in developments without an HOA.

[ea1776]

Here are my thoughts on both sides.

Home ownership -bad because
3. if paying it out over 30 years, paying way more than house is worth

That is only true if:

(Annual Percentage Increase of Home Value) < (Mortgage Interest Rate)

Disclosure - I lean towards renting since I am living abroad and traveling a lot (and b/c we can't afford home ownership yet). One day, when we "settle down" we'll purchase a home, but that's not even in my top 3 goals.

[Scanner]

Well, my ex-wife is upset at the terms of the divorce and was fighting with me yesterday as I was picking up the toddler.

She's dragging her feet on giving me the 60K and wants to do a "Do-Over" in court becuase she says she didn't understand the terms (with the parenting, that when I give them back for an overnight and one of them is sick, it's on her)

My attorney told me that she's basically S.O.L.

So. . .I am in a holding pattern right now. This crap changes day to day for me.

[cicy33]

Unless there is a home owners association that sets all kinds of ridiculous rules. We had heard so many HOA horror stories that when we were house hunting, we specifically told the realtor that we would only consider houses in developments without an HOA.

OMG that is so true. We briefly rented in one before we moved back home and you would think these people have nothing better to do than cause issues. Once we were working on our car. our own car cause we simply cannot afford a mechanic. That is not allowed in the driveway at all. only in the garage with the door up. course that is only cause they can't prove it. we had a friend stop by one day and she parked the wrong direction. This is a back neighborhood, not on main streets and very little traffic. They called the cops. She wasn't even there an hour. A few days later a neighbor had a party and people were parking everywhere and the wrong way, nobody called anybody. It is like they have their own "clicks" . ridiculous. I know that I will never live in one again. ever.

[cicy33]

Originally Posted by cicy33 View Post
Here are my thoughts on both sides.

Home ownership -bad because
3. if paying it out over 30 years, paying way more than house is worth

That is only true if:

(Annual Percentage Increase of Home Value) < (Mortgage Interest Rate)

Disclosure - I lean towards renting since I am living abroad and traveling a lot (and b/c we can't afford home ownership yet). One day, when we "settle down" we'll purchase a home, but that's not even in my top 3 goals.

Here is what I found at a site. borrowing 55,000 at 7% paid back over 20 years:

The bottom line, is that this repayment mortgage for $55,000.00, over 20 years, will cost you $426.41 a month.

In taking out this loan, you'll pay a total of $47,339.46 in interest. The true cost of this loan is $102,339.46

This means that basically one is paying double for their house. Now of course if it paid off faster that changes alot but the majority of people don't. so that 50,000 house just cost them 100,000. That is what I am getting at. and that was paying it back in 20 years. Here is the 30 year calculation:

The bottom line, is that this repayment mortgage for $55,000.00, over 30 years, will cost you $365.92 a month.

In taking out this loan, you'll pay a total of $76,729.89 in interest. The true cost of this loan is $131,729.89

[cicy33]

Now granted if they get a lower interest rate it helps but this is an average I think, to allow for the higher ones and the lower ones.