Brandon Denman - Broker/Owner
Denman Real Estate Group
BRE # 01378663
650-303-0880 direct

RENT vs. BUY


There are many tax advantages to home ownership.

Don’t pay another cent to your landlord!!! 

Start investing in your future!!!

 

 

 

BUY!!!

 

Example:

 

$450,000 house

 

10% Down                    $45,000                         EQUITY

 

Loan Amount                $405,000 @ 5.25% for 5 years fixed

 

Monthly Payment                   $2236

 

After 5 years of appreciation at just 2% = $496,836.  You will have gained $46,836 in EQUITY.

 

Plus the equity you have earned by paying down your principle every month for 5 years.

 

         

Year

Interest

Principle

1

$21,126

$5,710

2

$20,819

$6,017

3

$20,495

$6,341

4

$20,154

$6,682

5

$19,795

$7041

TOTAL

$102,389

$31,791

 

 

Total EQUITY after 5 years:           $45,000

                                                          $46,836

                                                        +$31,791

                                                          $123,627 EQUITY

 

TAX ADVANTAGES TO HOME OWNERSHIP

 

$405,000 Loan Amount X 5.25% amortized over 5 years =  $102,389 in interest = ~$20,478 per year in tax write-off!!!

 

Property Tax write off = $450,000 X 1.25% =  $5,625 per year.

 

Here’s a simple way to calculate the tax savings your monthly mortgage check will yield:

 

1) Start with the interest you will pay monthly (~$20,478/12 = 

    $1,706).

2) Next, add the monthly cost of property tax. ($450,000 

    purchase price X 0.0125 = $5,625/12 = $468)

3) Next, multiply the total by your tax rate (federal and state 

    ~33%)

          ($1,706 + $468 = $2,174 X 33% = $717)

4) The result of $717 is the amount you’re saving each month 

    in taxes.

5) Subtract this from your total monthly payment

    ($2,236 - $717 = $1,519)  This is the real cost of your 

    payment.

 

         

POWER OF EQUITY

 

Once you own a home you start to accumulate EQUITY.

 

EQUITY = $$$

 

You can borrow against this EQUITY and use it for whatever you want!

          ·  Purchase a new car

          ·  Pay for kid’s college

          ·  Pay for remodeling of your house

          ·  Pay for that dream vacation

Best of all, the interest you pay on that borrowed EQUITY is also tax deductible!!!

 

Rent??? - Why???          

                    

Rent:  $1800 per month = $21,600 per year = $108,000 over 5 years

 

·You have not saved anything.

·You have had no tax break.

·You still don’t own anything.

·You can’t borrow against equity because there is none.

 

 

Take a step ahead by investing in your future.  Purchase a home instead of renting and paying your landlord’s mortgage and giving him the tax benefits.  You work hard for your money, now let your money work hard for you!!!

 





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