No. of Recommendations: 1
Aren't I missing out on the tax advantages? Perhaps, but I have many other tax sheltering strategies that I take advantage of. The tax advantages of home ownership would not (in my case) come close to compensating me for the increase in virtually all other housing costs, such as maintenance and property taxes, not to mention the "opportunity cost" of not being able to have all that money put to use in better investments..

I too agree that residential real estate is oversold as an investment, but I think you're exaggerating the downside. First you have to compare apples to apples. You have to presume that your comparing renting the same size home (or condo, townhouse, whatever) to buying the same size house.

Some points I want to address (I only have a couple minutes so I'll do it bullet format):

1) Rent is not neccessarily cheaper. It can be, but not neccessarily. And if you think about it over the long term renting has to be more expensive. You pay all costs to the landlord, plus his profit. You might be able to take advantage of short-term price advantages (by short term 5 or so years) but over the long term you're going to lose.

2) Taxes, maintenance, and insurance. You pay those if you rent as well. Your landlord doesn't take care of those things out of the goodness of his heart.

3) Equity. If you are buying you are at least getting some equity with your monthly housing cost. Rent money just vanishes. Even though most of your intial payments go towards interest, you still get to keep all the price appreciation. Frex, you buy a $200,000 home which appreciates at 4% for three years. The house is now worth $224,000. If you were to sell, you'd get to keep the $24,000--tax free.

4) Inflation is your friend. Ask your parents how much their mortgage payment was/is. Its a ridiculously small amount. When they got it it was large, but 25 years later its laughably small. Thanks to inflation, the home owner's real costs become cheaper and cheaper over time.

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