Owning vs. Renting
| Own Or Rent | Advantages |
|---|---|
| Homeownership | Privacy Usually a good investment More stable housing costs from year to year Pride in ownership and strong community ties Tax incentives Equity buildup (savings) |
| Renting | Lower housing costs Shorter-term commitment No/minimal maintenance and repair costs |
Renting is better for the earth than buying, thanks to better-managed properties and the sharing of amenities and capital. Since landlords bear the risk of utility costs rising during the term of the lease, they have an incentive to keep costs low through better energy efficiency.
The benefits of renting are numerous, such as the ability to deter the vandalism that often plagues an empty home, the ease of tax breaks and the ability to generate income that covers the bills and possibly even creates a profit. The IRS stipulates that all rental income must be reported on your tax return.
The answer is no. Renting is not a waste of money. The argument against renting is that you're not putting your money toward a great investment: your home.
Disadvantages of owning a home
The rent-to-own setup is vulnerable to scams and shady landlords. As the tenant, you take on most of the risk in a rent-to-own contract. You're the one paying more than necessary in rent each month with the promise that the owner will credit the amount toward the purchase price someday.
If you're a homeowner, chances are you're worth much more than someone who rents, according to the Federal Reserve's 2020 Survey of Consumer Finances. Homeowners have a net worth that is more than 40 times greater than their renter counterparts, which reinforces the idea that owning a home is a smart financial move.
The short answer is: Your rent payment should total no more than 25% of your take-home pay. That's the magic number. As mentioned above, your monthly rent should be no more than 25% of your take-home pay.
When you decide to rent out your property, you will most likely need to notify your mortgage lender. It is quite possible that your lender will require certain information or actions to take place before they sign off on your rental plans.
Cons of Renting:
The IRS can levy penalties on landlords who fail to report rental income. ... However, if a landlord intentionally omits income from their return, the IRS will levy their penalty for a fraudulent return, which can include 20 percent of the amount underpaid along with a 75 percent penalty of the total tax owed.
Yet No Comments