Should I Rent Or Buy?

Many people ask the question, “Should I Rent or Buy?”. Recently in an advanced Real Estate course taught by Gage Froerer a long time real estate pro and Broker of a Century 21 office in Ogden Utah. Gage shared this work sheet to help an investor weigh their options. This form might be helpful in determining what may be best in your given situation. It is important to understand that it is not possible to take any depreciation on your personal home. It is also important to understand that the best advice when it comes to taxes can be found with a tax planning professional. This form is not intended to substitute consultation with a qualified tax professional.

 

RENT VS BUY ANALYSIS

Buy- After Tax Cost of Monthly Payment

Purchase Price $________________ Cash Down $___________________

Rental Rate and Term $________________ for _________ Years

Interest Rate_______ Term________ Monthly (PI)________________

Loan Amount __________X Interest Rate_____= $_______________

  1. Annual Taxes $_________________

  2. Approximate Annual Interest $_________________

c. Approximate Annual Depreciation $_________________

Annual Tax Savings a + b + c = Total Deductible Items$_______________

Buyers Tax Bracket _____________

 

Annual Tax Savings _____________

 

Monthly Savings divide by 12 _____________

Monthly (PITI)+CAM Monthly Rent Paid

Before Tax (PITI) _______________ Before Tax Payment ______________

Depreciation _______________ Monthly Savings _____________ Payment ________________ Payment _____________

Appreciation @ 2% ________________ Investment @ 4% ______________

Equity Increase ________________

 

Hopefully this may help as you explore the possibility of home ownership or purchasing a home for rental purposes.

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