Patrick.net has put up a pretty cool rent vs buy calculator. You can adjust most of the numbers used to calculate the final result. He has some default numbers that I don't totally agree with. However he lives in the Bay area where prices are still very inflated compared to the IE.
I changed a few of the default numbers. I bumped up annual price change (he uses -1%), I used 1% (I figure 0% for a few years then 2% after that, so 1% is conservative I think). Property taxes, DP, income tax rate, interest rate etc will need to be adjusted for your own situation.
I ran the numbers for most of the homes I've looked at lately and all of them were better off for a buyer. The picture is a screen grab of one propery I looked at. The rental amount is based on a current similar home that is for rent (although that rental amount seems low for this particular area). Either way even using a rental amount that seems low, a buyer comes out nearly $400/mo better off.
http://patrick.net/housing/calculator.php#header
I changed a few of the default numbers. I bumped up annual price change (he uses -1%), I used 1% (I figure 0% for a few years then 2% after that, so 1% is conservative I think). Property taxes, DP, income tax rate, interest rate etc will need to be adjusted for your own situation.
I ran the numbers for most of the homes I've looked at lately and all of them were better off for a buyer. The picture is a screen grab of one propery I looked at. The rental amount is based on a current similar home that is for rent (although that rental amount seems low for this particular area). Either way even using a rental amount that seems low, a buyer comes out nearly $400/mo better off.
http://patrick.net/housing/calculator.php#header
2 comments:
Can someone explain the 0 dollar tax deduction? Does the zero represent a fluctuation in numbers? I thought you could write off your interest paid on a property...
he puts zero there because there is no easy way to calculate the tax savings. It is going to be different for every person depending on what your itemized duductions come out to be. If your itemized deductions are less than the standard deduction ($11,400) then you don't save anything on your taxes for example.
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