The purchase dilemma

[Coronita]

1) You can't live in your stocks

2) Depending on your investment abilities (which almost everyone thinks they are experts at and few people are readily willing to admit that they aren't), you can loose a lot more money a lot quicker in stock market speculation.

3) For some people, have more readily available cash on hand means that they end up spending more rather than really saving for investment. If you have a bunch of bills piled high, it sometimes can sort of force you to have more discipline (though some folks have proved to max out other debts and exercise no discipline). For example, I see so many times among peers that are supposedly "saving" for a home, only to blow a few thousand here and there over time on new toys because they have more money at disposal. Net end result: still no money for a downpayment.

 

Max out your pre tax savings accounts, perhaps open a few roth/iras, and then after that it's really a personal decision imho

 

[img_assist|nid=5962|title=selfportrait|desc=|link=node|align=left|width=100|height=80]

—– Sour grapes for everyone!

[Anonymous]

Trojan – that analysis has not worked in favor of purchasing for a while. it makes more sense to rent.

if you want to do the tax calc properly, you should probably factor in state taxes as well. also, you used an 8% tax rate which seems low. your incremental tax rate if you are looking to purchase at $750k I would assume would be at 25% or higher. you should also factor in the ‘tax savings” on the additional $8-12k that you’ll be paying in property tax. That will “save” you about $3k in federal taxes (assuming 25% tax bracket).

anyway, bottom line is that it looks like you reached the correct conclusion. The tax savings don’t make up for the additional monthly payments. that analysis tends to work out in favor of purchasing when mortgage payments are near rent levels.

[Anonymous]

Trojan – that analysis has not worked in favor of purchasing for a while. it makes more sense to rent.

if you want to do the tax calc properly, you should probably factor in state taxes as well. also, you used an 8% tax rate which seems low. your incremental tax rate if you are looking to purchase at $750k I would assume would be at 25% or higher. you should also factor in the ‘tax savings” on the additional $8-12k that you’ll be paying in property tax. That will “save” you about $3k in federal taxes (assuming 25% tax bracket).

anyway, bottom line is that it looks like you reached the correct conclusion. The tax savings don’t make up for the additional monthly payments. that analysis tends to work out in favor of purchasing when mortgage payments are near rent levels.

[Anonymous]

Trojan – that analysis has not worked in favor of purchasing for a while. it makes more sense to rent.

if you want to do the tax calc properly, you should probably factor in state taxes as well. also, you used an 8% tax rate which seems low. your incremental tax rate if you are looking to purchase at $750k I would assume would be at 25% or higher. you should also factor in the ‘tax savings” on the additional $8-12k that you’ll be paying in property tax. That will “save” you about $3k in federal taxes (assuming 25% tax bracket).

anyway, bottom line is that it looks like you reached the correct conclusion. The tax savings don’t make up for the additional monthly payments. that analysis tends to work out in favor of purchasing when mortgage payments are near rent levels.

[Anonymous]

Trojan – that analysis has not worked in favor of purchasing for a while. it makes more sense to rent.

if you want to do the tax calc properly, you should probably factor in state taxes as well. also, you used an 8% tax rate which seems low. your incremental tax rate if you are looking to purchase at $750k I would assume would be at 25% or higher. you should also factor in the ‘tax savings” on the additional $8-12k that you’ll be paying in property tax. That will “save” you about $3k in federal taxes (assuming 25% tax bracket).

anyway, bottom line is that it looks like you reached the correct conclusion. The tax savings don’t make up for the additional monthly payments. that analysis tends to work out in favor of purchasing when mortgage payments are near rent levels.

[Anonymous]

Trojan – that analysis has not worked in favor of purchasing for a while. it makes more sense to rent.

if you want to do the tax calc properly, you should probably factor in state taxes as well. also, you used an 8% tax rate which seems low. your incremental tax rate if you are looking to purchase at $750k I would assume would be at 25% or higher. you should also factor in the ‘tax savings” on the additional $8-12k that you’ll be paying in property tax. That will “save” you about $3k in federal taxes (assuming 25% tax bracket).

anyway, bottom line is that it looks like you reached the correct conclusion. The tax savings don’t make up for the additional monthly payments. that analysis tends to work out in favor of purchasing when mortgage payments are near rent levels.

[an]

One other factor you have to consider is the capital gain tax when you compare the rent vs buy comparison. Right now, it’s sitting nicely at 15%, but if Obama has his way, it might get as high as 28%. That would tip the scale a little bit more toward buying. At the end of the day, every area is different, so the rent vs buy is different. We all would have to revisit this calculation periodically to see if it’s still cheaper to rent.

[an]

One other factor you have to consider is the capital gain tax when you compare the rent vs buy comparison. Right now, it’s sitting nicely at 15%, but if Obama has his way, it might get as high as 28%. That would tip the scale a little bit more toward buying. At the end of the day, every area is different, so the rent vs buy is different. We all would have to revisit this calculation periodically to see if it’s still cheaper to rent.

[an]

One other factor you have to consider is the capital gain tax when you compare the rent vs buy comparison. Right now, it’s sitting nicely at 15%, but if Obama has his way, it might get as high as 28%. That would tip the scale a little bit more toward buying. At the end of the day, every area is different, so the rent vs buy is different. We all would have to revisit this calculation periodically to see if it’s still cheaper to rent.

[an]

One other factor you have to consider is the capital gain tax when you compare the rent vs buy comparison. Right now, it’s sitting nicely at 15%, but if Obama has his way, it might get as high as 28%. That would tip the scale a little bit more toward buying. At the end of the day, every area is different, so the rent vs buy is different. We all would have to revisit this calculation periodically to see if it’s still cheaper to rent.

[an]

One other factor you have to consider is the capital gain tax when you compare the rent vs buy comparison. Right now, it’s sitting nicely at 15%, but if Obama has his way, it might get as high as 28%. That would tip the scale a little bit more toward buying. At the end of the day, every area is different, so the rent vs buy is different. We all would have to revisit this calculation periodically to see if it’s still cheaper to rent.

[Trojan4Life]

Piggs,

Thanks for the feedback, keep it coming.

A little more input from me:

raybyrnes

-Realize rents do rise, but how long will it take to become the same as a mortgage? Math still favors the rental option for the foreseeable future (3 years).

-leverage equals debt…not big on the kind of home I get for that kind of money right now.

– Tax shelter —good point on Capital gains exlusion

– Estate planning — good point

– College accounts are fully funded for kids

Still not convinced on buying though

FLU

I know that I can’t live in my stocks, but we’re talking about a significant amount of difference in rent vs. buy for that price of a home, not to mention the $$$ I’ll tie up with a downpayment.

I’m an investment novice, so I’d be inclined to go rather conservative.

SOBAY1

Not sure how you came up with 8%, I’m definitely in the 25% bracket and used that number in the online calculator I used.

Thanks for all your input.

Trojan4life

[Trojan4Life]

Piggs,

Thanks for the feedback, keep it coming.

A little more input from me:

raybyrnes

-Realize rents do rise, but how long will it take to become the same as a mortgage? Math still favors the rental option for the foreseeable future (3 years).

-leverage equals debt…not big on the kind of home I get for that kind of money right now.

– Tax shelter —good point on Capital gains exlusion

– Estate planning — good point

– College accounts are fully funded for kids

Still not convinced on buying though

FLU

I know that I can’t live in my stocks, but we’re talking about a significant amount of difference in rent vs. buy for that price of a home, not to mention the $$$ I’ll tie up with a downpayment.

I’m an investment novice, so I’d be inclined to go rather conservative.

SOBAY1

Not sure how you came up with 8%, I’m definitely in the 25% bracket and used that number in the online calculator I used.

Thanks for all your input.

Trojan4life

[Trojan4Life]

Piggs,

Thanks for the feedback, keep it coming.

A little more input from me:

raybyrnes

-Realize rents do rise, but how long will it take to become the same as a mortgage? Math still favors the rental option for the foreseeable future (3 years).

-leverage equals debt…not big on the kind of home I get for that kind of money right now.

– Tax shelter —good point on Capital gains exlusion

– Estate planning — good point

– College accounts are fully funded for kids

Still not convinced on buying though

FLU

I know that I can’t live in my stocks, but we’re talking about a significant amount of difference in rent vs. buy for that price of a home, not to mention the $$$ I’ll tie up with a downpayment.

I’m an investment novice, so I’d be inclined to go rather conservative.

SOBAY1

Not sure how you came up with 8%, I’m definitely in the 25% bracket and used that number in the online calculator I used.

Thanks for all your input.

Trojan4life

[Trojan4Life]

Piggs,

Thanks for the feedback, keep it coming.

A little more input from me:

raybyrnes

-Realize rents do rise, but how long will it take to become the same as a mortgage? Math still favors the rental option for the foreseeable future (3 years).

-leverage equals debt…not big on the kind of home I get for that kind of money right now.

– Tax shelter —good point on Capital gains exlusion

– Estate planning — good point

– College accounts are fully funded for kids

Still not convinced on buying though

FLU

I know that I can’t live in my stocks, but we’re talking about a significant amount of difference in rent vs. buy for that price of a home, not to mention the $$$ I’ll tie up with a downpayment.

I’m an investment novice, so I’d be inclined to go rather conservative.

SOBAY1

Not sure how you came up with 8%, I’m definitely in the 25% bracket and used that number in the online calculator I used.

Thanks for all your input.

Trojan4life

[Author]

Posts