Abberly Crest Blog

One of the most popular home ownership myths in Lexington Park, MD is that owning a house is a huge tax break as compared to renting.  I don’t know how many times people have personally told me that they want to buy a home because they NEED a tax deduction!  I just shake my head in disbelief because I have done the math.  

If your mortgage interest and other qualifying expenses such as charity contributions aren’t more than the standard deduction, ($11,600 for joint filers in 2011), there is no tax advantage to owning a home as opposed to renting an apartment in Lexington Park, MD.  Assume that you buy a $200,000 house with a 5% downpayment at a 6% interest rate.  Your mortgage interest for the year would be $11,336.  The Standard Deduction for joint filers is $11,600.  

In this example, there is NO TAX BENEFIT.  Even when there is a tax benefit, you most likely paid much more money to maintain the house than you are saving in taxes.  If your mortgage interest is more than the standard deduction and you choose to itemize, there is little to no advantage.  

For example, assume that your mortgage interest in 2011 is $15,000.  You would get to deduct an additional $3400 if you itemize BUT you spent $15,000 in mortgage interest to save $850 on your taxes (assuming 25% tax bracket).    

Don’t forget that you would also have all of the other expenses of home ownership that you would not have incurred when renting an apartment in Lexington Park, MD in an HHHunt community.

Although there are many reasons why people can tell you to buy a home, the decision to buy or rent a home depends on your personal situation; who you are, where you are, your career, your financial goals and how you want to spend your time. There is a prevailing thought that everybody should buy their own home. But research shows there are times and circumstances when renting might be a better idea.

Do you have the time?

There is no such thing as a sure thing in any investment. Usually what makes real estate a better risk than some investments is time. The longer you commit to a property, the better your chances of seeing its value appreciate.

If it is likely in any way that you will move, change jobs or stay in the house for a short period of time, less than 10 years, buying may not be a good idea. Letting go of a property before it has appreciated enough to cover the costs and commissions is not fun and if you bought with less than a 10% down payment, it could be costly. Fees and closing costs can wipe out appreciation gains, if there were any. If the purchase was made with an even smaller down payment, chances are you'll come out at a substantial loss.

Will you like the neighborhood?

If you are new to Lexington Park or Southern Maryland, take ample time to get to know the area before investing money in a house and its neighborhood. If you are relocating to a place you hardly know, spend a year in an apartment in Lexington Park until you're certain where and how you want to live and that you are going to stay at your job.

Will you be happy giving up the freedom?

Initially renting is less financial pressure than buying. Paying a first and last deposit doesn't compare to the big chunk of change required for a down payment on a house. If you do have enough savings for the down payment, you could invest it elsewhere and hope for significant capital gains. Imagine if you'd invested a typical down payment amount in the stock market ten years ago.

Renting gives you the freedom of time as well, with no yard or home maintenance projects. Natural and other disasters make renting a home a lower risk.

Even though rents tend to increase by 3% per year, unexpected maintenance costs or sudden property tax hikes will not affect you as a renter.

Relocating to Lexington Park, MD? You should look at Abberly Crest Apartments.Contact us to find our more about our online specials.

Rent is usually the biggest item on everyone’s budget. The average American renter spends about 35% of their gross income on rent and rent-related expenses. Fortunately, you don’t have to break the bank to keep a roof over your head in an apartment in Lexington Park, MD. Here are some simple ways to save money when renting.

Have Roommates
A great way to save money on rent is to have a roommate. Find a couple roommates. Living with roommates is much cheaper than renting your one bedroom apartment.

DIY Decorating
Make your apartment feel like a home by decorating frugally. If you enjoy photography, grab your camera and go take some pictures. Then use them as decorations around your apartment.

Inexpensive Furnishing
When you start the process of furnishing your apartment, take advantage of sites such as Freecycle or Craigslist to find inexpensive but nice furniture. Also, reach out to family and friends who may be trying to get rid of their unwanted furniture. There is no reason to buy new furniture for your place when you can save money by taking advantage of other people’s unwanted treasures.

Share Food Bills With Your Roommate
With the price of groceries rising, a great way to save money is to share food with your roommate. Invest in a membership to Sam’s Club or Costco, set up shopping days with your roommates, and buy in bulk and split the bill. Or, switch off cooking dinner every night. Cooking for more than one tends to be less expensive than making one meal at a time.

Watch Your Utilities
Utilities can add up quickly and be a total budget drainer. When leaving a room, turn off the lights. Don’t leave the water running when you are brushing your teeth. Invest in energy efficient lighting. By making small changes to your utility usage, you can save big time.

Take Advantage of Apartment Facilities
Abberly Crest has a beautiful gym onsite. Cancel your monthly gym membership! There is no need to spend money on outside facilities when you can use onsite facilities included in your rent.

Original article – US News Money