Timelies, all!

Happy Birthday, Betsy!

Too much blood in my caffeinestream. I must recalibrate.

Too much blood in my caffeinestream.

Very dangerous condition. I recommend taking immediate steps before things get any worse.

I'm with Nutty in hopping for a housing market crash just in time for me to afford one. However, I'm sure that the housing collapse will only come with increased interest rates, which will bite me in the ass.

Happy Earth Day, All!

In honor of Earth Day, we're having a tree (autumn flame maple) planted in our yard this afternoon. Just coincidence that it's today -- we bought it a couple of weekends ago.

To complicate the real estate question even further, there are tax implications. Mortgage interest is tax-deductible if you itemize your deductions (and in many of today's real estate markets, if you can afford to buy a home, you're itemizing anyway because of state income taxes). So the real cost of that interest is (interest payment - tax deduction), or put another way, the federal government gives you back a portion (roughly 1/3, for higher tax brackets) of the amount paid in the form of lower income taxes. While you're also paying property taxes on that home, those payments are also deductible.

Alternative investments also raise capital gains tax questions. When you sell that home, you get $250,000 in capital gains tax-free ($500,000 if you're married filing jointly). And until you sell, you pay no capital gains tax whatsoever. Other investments are different -- if you use the money to buy 1000 shares of Microsoft, you also defer the capital gains tax until you sell, but you don't get that $250,000. If you put it in a mutual fund, you pay capital gains every year because mutual funds have to pay out almost all of their gains annually.

In other words, the matter is such a complicated mess that there probably isn't one right answer to buy vs. rent.

Nutty, you can rent more cheaply than you can buy. I think, over time, you cannot rent at the same standard of living, more cheaply than you can buy, without a real estate crash. And then there are intangibles (pro and con) to both, and it is the personal weighting of the importance of those intangibles, that I think really helps the person make the decision.

Here's a new concept from FoxNews

[link]

Ooooookay.

without a real estate crash

During the last 2 years before we sold our condo, the condo's market value went up about 40%. In the 2 years since we bought our townhouse, the townhouse's market value has gone up around 60%.

I fear a bubble and an imminent crash.

Happy Birthday, Betsy!

Mortgage interest is tax-deductible if you itemize your deductions

That's a tricky issue in Kansas City. The housing is low enough that you can buy a nice 3 Bedroom, 2 Bath home and not have enough interest payments to itemize even with state taxes.

And then there are intangibles (pro and con) to both,

Mmmmm-hmmm. I spent part of last weekend changing air filters and smoke detector batteries at my parents' house. When I got home I found a note from the maintenance folks saying they'd been by and changed both at my place. Sure, Dad has a ladder and I don't. But then, he needs a ladder and I don't. The water heater in my apartment died a sudden, silent death last year. I called the office around 9:05 that morning and got home from work to find a bright, shiny new water heater. No muss, no fuss, no waiting around for plumbers. OTOH, I have one closet, period, and no room for a kitchen table. When I move it's 30 days notice and I'm out of there. On the other hand, my landlords have over 5 years of rental checks from me and I'll never see a penny of that again.

Meh. I'd like a condo or a townhouse, if only so I can paint the damn walls. (So, so tired of rental white.) But I definitely recognize some advantages to renting, especially in a place with a good maintenance program.