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Huge props for including things like the Marginal Tax rate for tax deduction and closing costs, which most of my peers that I've spoken to are unaware of or fai

Huge props for including things like the Marginal Tax rate for tax deduction and closing costs, which most of my peers that I've spoken to are unaware of or fail to take into consideration properly. I just recently had a conversation with a friend about renting vs buying, and I raced through many of the factors in this calculator to demonstrate that it's not such a simple question and that there are many factors that depend on one's financial (and other) situation, but it totally went over her head bc I was going way too fast. I'll definitely use this page when explaining things to my friends in the future. Thanks so much :)

mahyarm 12y ago
Wow, the marginal tax rate pretty much cut the rental limit in half, the difference is that big.
- leishulang 12y ago
  why higher marginal tax rate makes buying better? I don't get it.
  - dragonwriter 12y ago
    Higher marginal tax rates increases the $ value of mortgage interest deduction for the same amount of mortgage interest payment (since a deduction reduces taxable income, but the amount of reduction in actual tax liability is the reduction in taxable income times the marginal tax rate.)
    - leishulang 12y ago
      I see, but most mortgage doesn't have interest income tax deduction here in Canada? edit: Just check interweb, only mortgage that being used to invest for more incomes are eligible for tax reduction in Canada, thus more trouble to convert a house mortgage to investment mortgage.
kenrikm 12y ago
I used it to calculate if buying my house was a better deal than renting. Turns out over 30 years it was exactly the same.. down to the dollar.
- IgorPartola 12y ago
  Including the fact that you own the house after the 30 years?
  - eevilspock 12y ago
    The calculator of course takes this into account. Both contributions to principle and the appreciated value of the home.
  - vijucat 12y ago
    Not sure why you're getting downvoted for this, it's actually a quite relevant point, i.e., the the side-by-side comparison should include the consideration that you get to enjoy rent-free accommodation in the home for a certain number of years (or even generations!) once it's paid for. It gets more complicated when you have to factor in a positive probability for various outlier events such as the house getting bombed in a war, the entire city going Detroit, etc;
    - ryanjshaw 12y ago
      Even more complicated: - owning a house may make it harder for you to decide to move and accept a job/opportunity elsewhere, or to travel -- the impact of which is unquantifiable - for some people, by the time they'd finish paying off a house they'd already reasonably expect their parent's to have passed on and left wealth/property; for these people, particularly entrepreneurs, having free capital in the intervening period would turn out to be more rewarding so rental is a very sensible option - not everybody is born where they want to end up; I've moved between 3 cities and 2 countries in my 12 years as an adult (each time increasing my earnings, opportunities and life experience significantly, like climbing rungs on a ladder), and I'm hoping to move a 4th time so that I can finally have access to the top-rung opportunities other people born in major cities and 1st world countries take for granted -- the idea of owning houses in each of these cities and somehow managing to rent them out as some propose here is absurd to me, I barely have enough time to take care of my basic needs, nevermind run a multi-national property empire, and besides which there a Ultimately as nice as this calculator is, this is a very personal decision.

mahyarm 12y ago

Wow, the marginal tax rate pretty much cut the rental limit in half, the difference is that big.

leishulang 12y ago
why higher marginal tax rate makes buying better? I don't get it.
- dragonwriter 12y ago
  Higher marginal tax rates increases the $ value of mortgage interest deduction for the same amount of mortgage interest payment (since a deduction reduces taxable income, but the amount of reduction in actual tax liability is the reduction in taxable income times the marginal tax rate.)
  - leishulang 12y ago
    I see, but most mortgage doesn't have interest income tax deduction here in Canada? edit: Just check interweb, only mortgage that being used to invest for more incomes are eligible for tax reduction in Canada, thus more trouble to convert a house mortgage to investment mortgage.

kenrikm 12y ago

I used it to calculate if buying my house was a better deal than renting. Turns out over 30 years it was exactly the same.. down to the dollar.

IgorPartola 12y ago
Including the fact that you own the house after the 30 years?
- eevilspock 12y ago
  The calculator of course takes this into account. Both contributions to principle and the appreciated value of the home.
- vijucat 12y ago
  Not sure why you're getting downvoted for this, it's actually a quite relevant point, i.e., the the side-by-side comparison should include the consideration that you get to enjoy rent-free accommodation in the home for a certain number of years (or even generations!) once it's paid for. It gets more complicated when you have to factor in a positive probability for various outlier events such as the house getting bombed in a war, the entire city going Detroit, etc;
  - ryanjshaw 12y ago
    Even more complicated: - owning a house may make it harder for you to decide to move and accept a job/opportunity elsewhere, or to travel -- the impact of which is unquantifiable - for some people, by the time they'd finish paying off a house they'd already reasonably expect their parent's to have passed on and left wealth/property; for these people, particularly entrepreneurs, having free capital in the intervening period would turn out to be more rewarding so rental is a very sensible option - not everybody is born where they want to end up; I've moved between 3 cities and 2 countries in my 12 years as an adult (each time increasing my earnings, opportunities and life experience significantly, like climbing rungs on a ladder), and I'm hoping to move a 4th time so that I can finally have access to the top-rung opportunities other people born in major cities and 1st world countries take for granted -- the idea of owning houses in each of these cities and somehow managing to rent them out as some propose here is absurd to me, I barely have enough time to take care of my basic needs, nevermind run a multi-national property empire, and besides which there a Ultimately as nice as this calculator is, this is a very personal decision.