I follow that a "Reason to Buy" is that you don't pay tax if you "rent to yourself", but not why rental income from a third party should be a consideration if you're purchasing a house as a primary residence.
I wouldn't call it a benefit... at least not an "added" benefit. Everyone is paying for housing one way or another. For example, even if you were gifted a $1M house, by living in it, your opportunity cost would be an estimated $70K/year (using a 7% return on having $1M invested in the S&P500). Going back to the car example, the value you get is in using it - I think we're on the same page here. To get that value, you need to pay for it somehow. When I pay for that value using Option A (100% upfront), I can't say that the benefit of paying via Option A is that I don't have to pay for it via Option B (monthly lease payments) because essentially I have front loaded my payments.
There’s also a less obvious advantage: If you rented out your home, you would have to pay taxes on the rent you receive. But there’s no tax owed when you rent to yourself.
What is the comparison here - renting out your home vs renting a home to live in?
Comments:
I follow that a "Reason to Buy" is that you don't pay tax if you "rent to yourself", but not why rental income from a third party should be a consideration if you're purchasing a house as a primary residence.
Post: Five Reasons to Buy
Link to comment from December 15, 2021
I wouldn't call it a benefit... at least not an "added" benefit. Everyone is paying for housing one way or another. For example, even if you were gifted a $1M house, by living in it, your opportunity cost would be an estimated $70K/year (using a 7% return on having $1M invested in the S&P500). Going back to the car example, the value you get is in using it - I think we're on the same page here. To get that value, you need to pay for it somehow. When I pay for that value using Option A (100% upfront), I can't say that the benefit of paying via Option A is that I don't have to pay for it via Option B (monthly lease payments) because essentially I have front loaded my payments.
Post: Imputed Rent
Link to comment from December 15, 2021
Isn't this double-dipping? I own my car outright - does that mean I'm making lease payments to myself? I don't think so.
Post: Imputed Rent
Link to comment from December 6, 2021
Regarding the last sentence -
What is the comparison here - renting out your home vs renting a home to live in?Post: Five Reasons to Buy
Link to comment from December 6, 2021