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> Factoring in the % costs from before, that's a cost of $140.4k. For a married person with a million dollar home, they'll make ~$150k back from the section 12
by lakecresva 5y ago
> Factoring in the % costs from before, that's a cost of $140.4k.
For a married person with a million dollar home, they'll make ~$150k back from the section 121 nonrecognition provision alone if they ever sell, not to mention the salt and mortgage interest tax deductions. The tax code heavily incentivizes home ownership.
- gruez 5y ago>For a married person with a million dollar home, they'll make ~$150k back from the section 121 nonrecognition provision alone if they ever sell 1. that's on capital gains. If they're selling for a loss in OP's scenario, that works out to a tax savings of $0. 2. realistically speaking this can be factored into the cost of cost of capital (ie. opportunity cost of the downpayment/mortgage payment), but I didn't want to get into that because the calculation can get subjective. Housing has historically under-performed the stock market, but if you're a housing permabull, you might argue that the housing bubble will continue and outperform the stock market, making the opportunity cost of buying a house negative. >not to mention the salt and mortgage interest tax deductions that's a savings on mortgage interest, which is a cost that wasn't in my calculations. Including that cost and factoring in that deduction will make the numbers worse, not better. >The tax code heavily incentivizes home ownership. no disagreement there.
- lakecresva 5y agoI didn't realize you assumed a loss through the entire thing. Sure, if you ignore the realities of the US property market and begin with the assumption that your home is going to lose six figures in value every few years then yeah I guess renting is better than buying.