SINCE 1992, I HAVE owned four homes, including my current house in Philadelphia. I bought a house in New Jersey in 1992 for $165,000 and sold it two decades later for $409,000. I next owned an apartment in Manhattan, bought in 2011 for $570,000 and sold in 2014 for $800,000. I used the proceeds to buy an apartment just north of New York City, for $730,000, which I’m currently trying to sell.
All this makes homeownership sound like a money-making endeavor—and it has been, but perhaps not in the way readers imagine. For instance, in the time I owned the New Jersey home, I paid $106,000 in mortgage interest (and it would have been much more, but I paid off the mortgage early) and $120,000 in property taxes, plus I spent $183,000 on home improvements. I also had homeowner’s insurance, which might have averaged $500 a year. On top of all that, it cost me $9,000 in closing costs to buy the place and $32,000 in realtor commissions and other costs to sell.
To be sure, my mortgage interest and property taxes were tax-deductible. But even with that tax deduction, my total costs over the two decades were far greater than the profit I supposedly made when I sold my New Jersey home.
A bad deal? Not at all. For two decades, the house provided my family with a place to live. A quick back-of-the-envelope calculation suggests that this 20 years of imputed rent might have amounted to $400,000.
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