Rent vs. Own

Should you buy or rent? This is a question most of us will likely face in our lives, whether buying a house makes more financial sense than renting a home. There is a way to understand the financial impact of buying vs. renting.

Use this rent vs. own calculator, provided by realtor.com, to help you understand more.

Tax Benefits of Home Ownership

Buying real estate means you get to take advantage of tax breaks, such as deducting the interest you pay on your mortgage loan. Homeowners receive a statement from their lenders by the end of January, Form 1098, with the amount of mortgage interest paid during the previous year, which is often deductible. Homeowners may also deduct annual real estate taxes paid based on the assessed value of their property, and certain energy-efficient home improvements (such as installing energy-efficient heating and cooling systems, certain roof replacements, windows and doors, and other improvements). These deductions may vary from year to year, so check the IRS.gov website for the most up-to-date information regarding tax breaks for homeowners.

Long-Term Homeownership Builds Equity

Homeowners pay monthly mortgage payments, gradually reducing the principal mortgage amount over time. In general, real estate increases in value over time, so homeowners build equity and increase their stake of ownership in the property with every payment. That means that when they sell the home, they will get enough money to pay off their loan, and earn a little extra that they can use to purchase their next home. In contrast, renters still make a monthly payment, but these funds do nothing to contribute to the renter’s long-term wealth.