Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev Thread | Next Thread
Author: CM001 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121219  
Subject: A personal tax question… Date: 9/5/2007 8:13 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Hi,

I live in CA. We make about $200K a year in salary and have a kid. We rent and looking into buying house. Given the current housing market scenario, we want to wait. A friend of mine is telling, I don't have to wait because, I will be making a significant tax savings. He owns a house and has no way of telling how effective it will be for us, but stronly feels we will be saving a lot in tax.

Any help is appreciated.

Thanks
Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95733 of 121219
Subject: Re: A personal tax question… Date: 9/5/2007 8:58 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 12
I live in CA.

As do I.

We make about $200K a year in salary

Good. That means you can afford a starter home in CA. ;-)

and have a kid.

OK. One extra exemption.

We rent and looking into buying house. Given the current housing market scenario, we want to wait.

Then wait.

A friend of mine is telling, I don't have to wait because, I will be making a significant tax savings.

How can he know that? Did you give him a copy of your tax return? Your plans for the house you want to buy?

He owns a house and has no way of telling how effective it will be for us,

There you go. He's talking out of his [deleted due to the new TMF word filter]. He has no idea how effective it will be, but he knows you will be making a significant tax savings. Brilliant! Maybe he can also tell me what Saturday's lotto numbers are. The skills are the same.

Oh. And let's not forget the minor issues around the current housing market. CA is squarely in the sights of any downturn in housing prices. We had a lot of the run-up in prices -- we're going to see a lot of the down side as well.

So are these imaginary tax savings going to be enough to offset any projected decrease in the value of the house? What does his crystal ball say about that??

but stronly feels we will be saving a lot in tax.

How about we go with numbers instead of strong feelings? After all, I'm not so sure I like my strong feelings about this so-called friend of yours.

Unfortunately, there are no shortcuts here. With $200k in income and living in CA, you are already paying AMT. That either complicates things or simplifies things, depending on your point of view. If you really want to know what your tax savings are, you're going to have to do a proper tax projection. Take a copy your 2006 tax return. (Hopefully you used software to prepare it, as that will make this easier.) Add in your projected mortgage interest and property taxes. Although the property taxes may not make a difference because of AMT. Do all of the necessary refiguring. Now take a look at the taxes you would have paid and compare that to the taxes you actually paid. There is a rough projection of your personal tax savings.

--Peter

PS - Have I made my opinion clear enough on the quality of this friend's advice?

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95736 of 121219
Subject: Re: A personal tax question… Date: 9/5/2007 10:06 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Unfortunately, there are no shortcuts here. With $200k in income and living in CA, you are already paying AMT. That either complicates things or simplifies things, depending on your point of view. If you really want to know what your tax savings are, you're going to have to do a proper tax projection. Take a copy your 2006 tax return. (Hopefully you used software to prepare it, as that will make this easier.) Add in your projected mortgage interest and property taxes. Although the property taxes may not make a difference because of AMT. Do all of the necessary refiguring. Now take a look at the taxes you would have paid and compare that to the taxes you actually paid. There is a rough projection of your personal tax savings.

Let me add one additional thought to Peter's otherwise excellent post. In addition to comparing your taxes both ways, look at how much your housing will cost you out-of-pocket both ways. It isn't too intelligent to save a few $K in taxes if it costs a few $10K in out of pocket expenses to get that savings.

Ira

Print the post Back To Top
Author: ngcpa Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95737 of 121219
Subject: Re: A personal tax question… Date: 9/5/2007 11:20 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
<<<Unfortunately, there are no shortcuts here. With $200k in income and living in CA, you are already paying AMT. That either complicates things or simplifies things, depending on your point of view. If you really want to know what your tax savings are, you're going to have to do a proper tax projection. Take a copy your 2006 tax return. (Hopefully you used software to prepare it, as that will make this easier.) Add in your projected mortgage interest and property taxes. Although the property taxes may not make a difference because of AMT. Do all of the necessary refiguring. Now take a look at the taxes you would have paid and compare that to the taxes you actually paid. There is a rough projection of your personal tax savings.>>>

As a profressional tax preparer, it always amazes me how people are willing to take tax advice from TMF boards, friends, relatives and acquaintances. You are earning $ 200K. Why not spring for a few bucks and get some advice from a CPA, registered agent or tax attorney. It could be well worth it. I love it when a client tells me his brother-in-law said he could do some outrageous thing on his tax return. Some times after explaining the rules and still hearing the same thing, I suggest they have their brother-in-law prepare their taxes.
Norm

Print the post Back To Top
Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95738 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 12:17 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
ptheland writes (in part):

How can he know that? Did you give him a copy of your tax return? Your plans for the house you want to buy?

I reply:

At that income level, state taxes alone make it virtually certain that the original poster is already itemizing. So all of the mortgage interest will be an itemized deduction, which survives the conversion to AMT. I predict that the federal tax savings will be 32.5% of the interest, and state taxes will be an additional 9.1% of the interest. I suppose if the house is expensive enough, the mortgage interest might drive the poster back out of AMT range which would change the numbers some. --Bob

Print the post Back To Top
Author: mrparrotfez Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95739 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 2:14 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
Don't feel bad, Norm. As a computer support guy, I got it all the time. "Uh, I was having trouble with my Internet disk, and my hard drive, the small one, wasn't downloading my files, and my AOL wasn't logging onto Google. And I think my password had a virus. I'm a total computer boob, but my nephew works out at the Site and he's a total whiz, he knows EVERYTHING about computers, and Excel, so I had him come over. He said I had to reformat my CPU, start everything over, and he did it, but now my disk doesn't work at all and my Windows is weird and I can't log on to my Web and none of my programs will download. How much do you charge to fix that?"

I knew I needed to get out of the business when I began saying: "Too much. My recommendation is that you sue your nephew. Failing that, kidnap him and chain him to your computer on bread and water until the little punk uses his vast know-how to fix the mess he made because he didn't have the faintest notion what he was doing."

You'll be pleased to know that there is at least one investor out here who treasures his relationship with his CPA. I do not understand the resistance to this. I pay $200 a year (1/2000 of the sum I'm managing), thereabouts, and I get my taxes done by someone who is accountable. I get the privilege of calling or e-mailing with tax questions, even Nervous Nellie ones I've asked before, patiently answered again for the fifth time. I have an ally in the eternal struggle against the demons and devil-spawn of Internal Revenue. All that's asked of me is to be polite, gather my information in usable format each year, and pay my bill promptly--three things I can be good at in life when I put my mind to them.

Sure, it sucks to have a tax system that requires you to hire someone to do your taxes. At least I think it does. But that's the system and I don't have the power to change it; only to work within it. And for an investor, the foundation stone is a solid CPA relationship.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95740 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 3:53 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
As a profressional tax preparer, it always amazes me how people are willing to take tax advice from TMF boards, friends, relatives and acquaintances. You are earning $ 200K. Why not spring for a few bucks and get some advice from a CPA, registered agent or tax attorney. It could be well worth it.

You're preaching to the choir, Norm. Can I hear an "Amen!" brothers and sisters?

I love it when a client tells me his brother-in-law said he could do some outrageous thing on his tax return. Some times after explaining the rules and still hearing the same thing, I suggest they have their brother-in-law prepare their taxes.

I'll have to try that one sometime. I like it. ;-)

--Peter

Print the post Back To Top
Author: riverfloat One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95743 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 9:13 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
We rent and looking into buying house. Given the current housing market scenario, we want to wait...

IMHO where you live may shouldn't be viewed as an investment or a tax vehicle first, but as the home you share with your family. Just as no one on there death bed says "I wish I had spent more time at the office", I suspect no one says "I'm grateful for not being able to make my rental house really ours."

If you intent to stay in your area for a while, then I think the time to buy is (almost) always now. A strong theme on these boards WRT investing is don't try to market time, yet that's what you're talking about doing about buying a family home. And like the market, no one can really predict when housing will bottom, or start rising again. Also, housing is all local, so when national trends are "revealed", they may be unrelated to your neighborhood.

So my humble opinion is if your ready to buy, do it. There are some incredible opportunities out there right now.

Just my thoughts,

Andy

Print the post Back To Top
Author: CM001 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95746 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 10:19 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Norm,

I do the taxes myself. I used tax preparers for 3 years and all the times it was a disaster, cost me more money, and realized I would be better off with Turbo Tax. The reason is this, I travel. Typically, my income is spread over 2 or 3 different states. And I have a trading portfolio with at least 200 transactions per year. Not only they charge me much more than $200 but simply they are incompetent. The NY state rejected the filing prepared by the 'experts' and I had to do it again manually, and the delay cost me in additional fines. Likewise, the tax preparer in his quest to reduce tax, played with the bonus on my tax preparation and my friends, resulting in an audit and what not. This is the reason I consider most of them are incompetent. For NY City, you need to file a separate returns for the city and state. I told this to my preparer when he prepared only for the state. He argued it is not so and insisted he is the subject matter expert and I pay to listen to him. I should have known better to let him handle my taxes. I let him put me in trouble. Not only I ended up paying taxes, but I had to do that myself.

I believe you are a tax prepaprer by profession, but the experiences my friends and I had made me to stick with Turbo Tax. Frankly, I am in no special situation where a tax prepare can add value to me.

BTW, I am not seeking a specific tax benefit, rather I am getting a general opinion.

PS: Value is a tricky one, whether it is cheap (or free in this case) or expensive doesn't make it really something valuable.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: JHutch00 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95749 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 10:59 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
As a profressional tax preparer, it always amazes me how people are willing to take tax advice from TMF boards, friends, relatives and acquaintances. I love it when a client tells me his brother-in-law said he could do some outrageous thing on his tax return. Some times after explaining the rules and still hearing the same thing, I suggest they have their brother-in-law prepare their taxes.

Maybe I just had a bad experience, but I went to an HR Block tax preparer (who was recomended by a friend). It cost >$500, they basicly walked me through their version of quickbooks and I had to explain that 457 plans had a seperate contribution limit from 403b.

I try to stay up to date on the tax rules that apply to me, and quite frankly it's not that tough (even being self employed). It seems I needed to stay on top of things either way.

I know there are competent tax prepares out there, but after my first experience with a tax preparer I wouldn't feel comfortable just handing my records over to some one and picking up my return later.

Print the post Back To Top
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95750 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 11:04 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
I do the taxes myself. I used tax preparers for 3 years and all the times it was a disaster, cost me more money, and realized I would be better off with Turbo Tax. The reason is this, I travel. Typically, my income is spread over 2 or 3 different states. And I have a trading portfolio with at least 200 transactions per year. Not only they charge me much more than $200 but simply they are incompetent. The NY state rejected the filing prepared by the 'experts' and I had to do it again manually, and the delay cost me in additional fines. Likewise, the tax preparer in his quest to reduce tax, played with the bonus on my tax preparation and my friends, resulting in an audit and what not. This is the reason I consider most of them are incompetent. For NY City, you need to file a separate returns for the city and state. I told this to my preparer when he prepared only for the state. He argued it is not so and insisted he is the subject matter expert and I pay to listen to him. I should have known better to let him handle my taxes. I let him put me in trouble. Not only I ended up paying taxes, but I had to do that myself.

Anyone who has to file in more than one state should probably use a skilled tax professional to prepare his tax returns. The interactions between the states (what they tax, what credits they offer for taxes paid to other states) can be quite complicated. TurboTax and the other consumer tax programs do not handle multistate tax preparation well unless the user is very knowledgeable about the rules and can prepare the returns manually. Otherwise, there is no guarantee that you've got a correctly prepared return, only one that looks pretty.

Second, there is no separate NYC tax return unless you run an unincorporated business within the city. NYC income tax is filed as part of the NYS IT-150/201/203 return. NYC unincorporated business tax (NYC-202) is an additional tax above the straight NYC income tax. If you're thinking about the NYC nonresident income tax (NYC-203), that was abolished nearly a decade ago.

In this case, your tax preparer was right.

Ira

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95753 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 11:14 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
This is the reason I consider most of them are incompetent.

Well, then. You'd better ignore most of the posts you read on this board. Most of the people answering questions are working tax professionals, including myself.

I guess since I'm in there with the incompetent crowd, I won't waste your time with any responses. They'll just be wrong anyway.

--Peter <== who doesn't do well with being called incompetent

Print the post Back To Top
Author: JHutch00 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95754 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 11:18 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Anyone who has to file in more than one state should probably use a skilled tax professional to prepare his tax returns.

One that is skilled in all of the states you need to file in because ...

The interactions between the states (what they tax, what credits they offer for taxes paid to other states) can be quite complicated.

TurboTax and the other consumer tax programs do not handle multistate tax preparation well unless the user is very knowledgeable about the rules and can prepare the returns manually.

I think this depends on what states you are talking about. Turbo tax handle my return well the year I got married and my wife and I moved to California. She moved from Mass, I moved from NH. I couldn't e-file for one of the states, but the walk through the returns was easy enough, and that was 7 years ago.

Last year I moved from California to Maine. Non of the programs (TurboTax, TaxCut, TaxAct) handled the Maine part-year resident/non-resident forms well, and I ended up having to do that one manually.

Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95755 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 11:29 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Maybe I just had a bad experience, but I went to an HR Block tax preparer (who was recomended by a friend). It cost >$500, they basicly walked me through their version of quickbooks and I had to explain that 457 plans had a seperate contribution limit from 403b.

H&R Block is a very hit and miss organization. The quality of the tax work you get there is dependent entirely on the person you get. They have a pretty good training course, and will hire just about anyone who gets through the course. Many people working there are strictly seasonal, working only 3 months a year in taxes. But they also have some very good year round (and seasonal) people.

It sounds to me like you got a first year person who probably needed more supervision. They generally do a good job on pretty simple returns, with the quality of the work falling off very quickly as complexities arise.

I try to stay up to date on the tax rules that apply to me, and quite frankly it's not that tough (even being self employed). It seems I needed to stay on top of things either way.

I agree that you should stay on top of your tax situation. There is no one - even a good professional - with more interest in your taxes. However, a good pro can help the most when you get into new areas. They keep on top of changes in the law and how those changes affect you.

I know there are competent tax prepares out there, but after my first experience with a tax preparer I wouldn't feel comfortable just handing my records over to some one and picking up my return later.

A competent tax pro wouldn't do that. I spend a good chunk of time (at least half an hour up to a couple of hours) with my clients going over the information they bring, making sure I understand what they have brought, looking for missing information, thinking about their situation.

Some clients do just drop things off. But even then I follow up with phone calls (or other modern means of communication) to check on things, ask questions and make sure I've got the whole picture.

I think most good professionals will do something similar. That is the service we provide. I have no desire to be simply a compiler of assorted receipts and forms into a tax return. That is just keeping score after the fact. I want to understand my clients' whole financial picture and use that information to help advise them. The tax return is just a byproduct of that process.

--Peter

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95756 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 11:33 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Maybe I just had a bad experience, but I went to an HR Block tax preparer (who was recomended by a friend). It cost >$500, they basicly walked me through their version of quickbooks and I had to explain that 457 plans had a seperate contribution limit from 403b.

I try to stay up to date on the tax rules that apply to me, and quite frankly it's not that tough (even being self employed). It seems I needed to stay on top of things either way.

I know there are competent tax prepares out there, but after my first experience with a tax preparer I wouldn't feel comfortable just handing my records over to some one and picking up my return later.


Going to H&R Block was a mistake. While there are many good Block preparers, there are also many who just completed their training and have no experience. Someone who is self-employed should use their professional division as a minimum.

What you (the hypothetical you) really want is to find a tax preparer who is available all-year and has the experience to handle the tax issues relevant to your tax return. A good tax preparer won't just hand over your tax return when completed, but will take the time to explain the return and will alert you to opportunities/risks/tax law changes, etc. The FAQ area (to the right ------->) contains good advice on how to find a competent tax preparer.

Ira

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: CM001 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95758 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 1:19 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Peter,

Sorry. My intention was not to generalize. I guess the disappointment and the huge money I paid, and subsequent audits and fines, had left a scare that is not healed even after a decade.

In any case, I came to this board to seek help and not to hurt anyone. If I am then my appologies.

Print the post Back To Top
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95759 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 1:50 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Sorry. My intention was not to generalize. I guess the disappointment and the huge money I paid, and subsequent audits and fines, had left a scare that is not healed even after a decade.

If this bad experience was truly a decade ago, then your observation about a separate NYC income tax form for a non-resident of NYC was valid. Any tax preparer with even fleeting awareness of NY tax issues should have known that. I assumed your experiences were more recent than that.

Ira

Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95760 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 2:01 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
In any case, I came to this board to seek help and not to hurt anyone. If I am then my appologies.

Thank you.

I am not going to try to defend everyone in my profession. There are folks out there doing taxes that should not be doing so. But there are an awful lot of people doing a fine job day in and day out. They are doing what they love doing, keep up with the laws, research stuff they need to know, and aren't afraid to tell you when they're in over their head.

And I think the pros who post here are a pretty darn good bunch.

--Peter <== who learns as much posting here as he gives in advice.

Print the post Back To Top
Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95764 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 3:26 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
You'll be pleased to know that there is at least one investor out here who treasures his relationship with his CPA. I do not understand the resistance to this. I pay $200 a year

I pay $300/hour.
We have complicated taxes and we are very good with math, so finding someone more competent than we are was hard, even though we live in a large metro area. In my search, my favorite was the accountant who said he didn't see what we needed him for. My least favorite was the 80-year-old who, when asked how he kept current, told us he graduated from a very good school. The CPA we have is very, very good.

Mostly we just ask questions (and pay for it) and do our own taxes. This board is very good at alerting me to the issues.

Thanks a lot, everybody.
Vickifool

Print the post Back To Top
Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95766 of 121219
Subject: Re: A personal tax question… Date: 9/6/2007 6:11 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Don't feel bad, Norm. As a computer support guy, I got it all the time. "Uh, I was having trouble with my Internet disk, and my hard drive, the small one, wasn't downloading my files, and my AOL wasn't logging onto Google. And I think my password had a virus. I'm a total computer boob, but my nephew works out at the Site and he's a total whiz, he knows EVERYTHING about computers, and Excel, so I had him come over. He said I had to reformat my CPU, start everything over, and he did it, but now my disk doesn't work at all and my Windows is weird and I can't log on to my Web and none of my programs will download. How much do you charge to fix that?"

http://www.ctrlaltdel-online.com/comic.php?d=20030530

Print the post Back To Top
Author: glorioski Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95807 of 121219
Subject: Re: A personal tax question… Date: 9/11/2007 3:04 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
Renting Makes More Financial Sense Than Homeownership
http://www.smartmoney.com/home/living/index.cfm?story=rent&cid=1012

By Jack Hough
April 18, 2007

I HAVE SOMETHING un-American to confess: I rent an apartment, despite having enough money to buy a house. I plan to keep renting for as long as I can. I'm not just holding out for better prices. Renting will make me richer.

I normally write about stocks for SmartMoney.com, but the boss asked me to explain to readers my reason for renting. Here goes: Businesses are great investments while houses are poor ones, so I'd rather rent the latter and own the former.
=====================
more at the link

Print the post Back To Top
Author: khaar Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 95809 of 121219
Subject: Re: A personal tax question… Date: 9/11/2007 4:53 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Renting Makes More Financial Sense Than Homeownership

I am, again, thrilled that so many people prefer to live in the huge cities on the coasts (and a few other key places throughout the country) than in some of the more out-of-the-way places inland. But it amazes me that people will repeatedly debate the wisdom of buying a house vs. renting while living in an area where the cost of living is (from my perspective) outrageous. If you want to increase your net worth, choice of places to live seems at least as important as whether to buy or rent.

Since, according to the author, the monthly payment (including insurance & taxes) plus utilities/monthly rent ratio is currently 19/1, I should rent a 3-bedroom place for $100/month? (And I'm not even considering the 2.5 acres and 2400 sq. ft. that we have to play in.) Even here, even if we include the not-so-great portions of town, I think that'd be a bit hard to find!! Yet I see nowhere that the author qualifies his statements.

Teachers here (Carlsbad, NM) start at $35K, top of the scale (MA+45hr, 17 years) is $72K. For engineers, starting salary is closer to $60K, getting into the lower $100's in about 10 years. A decent older house (3-bdrm, 1400 sqft) will run you $100K-$150K to purchase. Taxes are negligible (under $1000/year), although insurance is high (hail damage--probably $1500/year). State income taxes run about 7% of gross income. I would guess that the ratio of monthly payment to monthly rent locally is somewhere around 5 (ours is maybe 2).

To the OP and anyone else, there is no one-size-fits-all answer. Learn to use a spreadsheet and run your own numbers--otherwise you're just guessing.

Kathleen

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
UnThreaded | Threaded | Whole Thread (22) | Ignore Thread Prev Thread | Next Thread
Advertisement