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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (242878)	4/2/2010 10:52:06 AM
From: GraceZ	Read Replies (1) \| Respond to of 306849

what tax incentive is that? unless you mean avoiding capital gains tax. Income tax, not cap gains. If I sell the house obviously I'd avoid the cap gains but when I put the cash into some financial asset that will produce income enough to pay the rent on a like property, I'm paying income tax on that income whereas the value my house provides as a dwelling is a tax free benefit. I know you think I'm not factoring RE tax but in terms of RE tax, there is no difference between renting and owning. Renters still pay RE tax, it is simply included within their monthly rent as well as repairs and depreciation, etc. (as a former landlord I can tell you I wasn't the one paying that tax, the renter was). And in my location owner occupied is taxed at a discount to investment property. Renters pay MORE RE tax than owners of a primary residence. There is no avoiding that cost unless you decide to go homeless or yeast off someone else who is paying. Both schemes, renting and owning have the risk of declining fiscal situations with higher future taxes and inflation risk but only owning can provide the benefit of providing a roof over your head without it generating a taxable event. Also, improvements that we do ourselves can add value to our house in excess of the cost, providing us with essentially tax free cap gains (tax free income for our labor). Try doing that as a renter, improve your rental and you've given your landlord a capital gain. Like I said earlier, right now it is about equal in my location (your mileage may vary). The after tax income I'd receive in a similar risk asset for the cash I'd get on a sale of my house is roughly equal to the rent of a like property.