From comment at the Globe and Mail by Geo Centric 3 Jul 2011 10:11am –
“I’ve been a renter and an owner. Without doubt, from a financial and quality of life point of view, ownership is the correct choice for most people in the long term. How many people, who have been homeowners for 20 years or more, have you heard say “that was mistake – I should have rented”?
We have 60-year old friends that have been renters for 40 years. They have no equity in a home and will be paying ever-increasing rent with nothing to show for the rest of their lives. I have been mortgage free for 10 years and the value of the house has increased by $450K over the 19 years I lived here. If I sold it, I would get my $250K purchase price returned as well [the price appreciation] for a total of $700K – tax free. That’s a tax efficient average annual return of 5.2%.
But wait, there’s more, as Billy Mays would have said. I also get a tax-free dividend each month from my house – the value of what it would cost me to rent it, which is currently about $2,800. Remember, rent is paid with taxed dollars, so to pay your $1,200 apartment rent you might have to earn $1,500 to $2,000 gross, depending on income and tax situation.”
A question for newbies and relative newbies: What is the most important factor that ‘Geo Centric’ is leaving out of their calculations? – vreaa