So I'm thinking of moving to Vegas... help? (some kinda-tax stuff)

[YTV]

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I know you don't WANT to buy. Sometimes I don't WANT to push very small edges at the poker table, but I do. Buying a house even in a slow market is major +EV compared to renting. You are throwing money away by renting, bottom line. If you pay 1000/month, that is 12,000 for 5 years, or 60K down the drain. Maybe you save money for a down payment five years from now, maybe not. If you buy, get a loan with no down payment, your mortgage payment will be slightly higher than 1K/month, if not equal. At the end of the 5 years, you have equity in the house, and the money you will save for the next downpayment. As long as you live in your home for two years, you avoid short term capital gains. If I were young like you, I would buy as much house as I could possibly afford, and rent a room or two to cover the majority of the mortgage payment each month. You live effectively for free, and you get all the savings that a house gives you. I am no financial advisor, so you should study these things on your own, but I find it hard to believe that someone like yourself is willing to take the risk of casinowhoring, affilating for sites, etc... would not be willing to buy a house to maximize your financial well-being. Making 100K a year and not buying a house is the equivalent of folding pocket aces on this hand so that they will pay off more on the next. Just dumb!

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Well lets see, I bought a $140,000 house exactly 5 years ago at 6% Fixed interest rate. The house is worth roughly the exact same today as it was 5 years ago. My principal has only gone down $4,700 since then. So if I was to sell my house, after real estate commisions I would probably lose a little money. Not to mention all the repair and maintenance costs associated with owning, even in a 5 year old house like mine. If I could do it all over, I would definately rent, sooooooo much easier, and so much more freedom. Not to mention I could live in a nice 3 bedroom townhouse community with swimming pool, 24 hour fitness center, and many more amnenities for less than my mortgage payment. My utility payments would be atleast 30% less in an apartment also.

[pokerrookie]

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there are a number of costs associated with buying/owning that are cheaper/nonexistant when renting.

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For example?

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Off the top of my head -- two things:

Insurance - renters insurance just covers your personal property in the house. Homeowners insurance covers you personal property AND the real property (house).

Maintenance/Repairs - if your renting and the washing machine, dish washer, heater, etc breaks - call your landlord or management company. If your an owner, you have to get it fixed and pay for it yourself.

Myself, I own but I've been where I am or a while and plan on being here a while longer.

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1. interest
2. property tax
3. insurance
4. maintenance/repairs
5. higher utility charge

Also don't forget when you sell your house you are likely to pay 6% agent fees PLUS buyer's closing cost.

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Whatever you do... PLEASE DON'T BUY A HOUSE!

(It keeps driving the rent up in all my places.) Talking about BANK!

Can you deduct the rent from your taxes?

Yes, you may pay 6% for selling, but you only pay $1000 in closing costs if you house is priced $1000 too high.

No, if you think you probably are not staying in a place more than 2 years, then the risks probably suggest you should rent. But if there is a 60% chance you will stay longer than 3 years and only a 20% chance you would move before 18 months... Well, it's starting to sound like a poker decision... I'm going w/ EV+ in buying.

As to the guy talking about renting out your rooms... now you are talking about a part time job and you better educate yourself before you jump in. Making the wrong moves as a landlord can be extreemly expensive. Read the law and join a property association whereever you move to.

psw

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Glad to see someone on this forum has some sense. Good points all. As far as the room renting, I was thinking more along the lines of college buddies living together. One person owns the house, the other pays "rent." But I understand your point. Since the OP already has a roommate, I figured it wouldnt be that much of a stretch.

[Luv2DriveTT]

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I've lived in Vegas for 7 years now. I love Vegas, Ive had apartments on all sides of town practically. Henderson/GV was probably the nicest though. I go to UNLV, they have a nice business department and an Econ major. Pretty cheap compared to other schools too. Really hot in the summer...really hot. Cox cable provides solid fast internet hardly ever goes down (important!) sales tax was like 7.75 or something, no state taxes as has been stated. Go to apartmentguide.com and search vegas for apartment rates if thats what you want. Otherwise everybody and their brother has a house to sell you right now. Good luck in your move.

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I read an article last week that real estate is booming near the strip, went up 88% in the past year alone. Perhaps buying isn't that bad, even if you gain a measly 7-10% increase in a 1 year period of time.

TT [img]/images/graemlins/club.gif[/img]

[grinin]

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Well lets see, I bought a $140,000 house exactly 5 years ago at 6% Fixed interest rate. The house is worth roughly the exact same today as it was 5 years ago....

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Sample Size

PS. I bought a new home in Florida 2.5 years ago for $170K. The nearly identical one next door to me sold for $255K 9 months ago. Also a couple we know, is now looking to buy a home and they have said that anything similar to our home, priced around $300K, has not been staying on the market for more than a month. (they have been looking for a while now)

I believe some of this is due to the hurricanes of this and last year bringing up the cost of construction in Florida and that Florida was probably undervalued previously.

[PSW]

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Well lets see, I bought a $140,000 house exactly 5 years ago at 6% Fixed interest rate. The house is worth roughly the exact same today as it was 5 years ago....

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Sample Size

PS. I bought a new home in Florida 2.5 years ago for $170K. The nearly identical one next door to me sold for $255K 9 months ago. Also a couple we know, is now looking to buy a home and they have said that anything similar to our home, priced around $300K, has not been staying on the market for more than a month. (they have been looking for a while now)

I believe some of this is due to the hurricanes of this and last year bringing up the cost of construction in Florida and that Florida was probably undervalued previously.

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Yeah, I don't actually think you are right about your home in Michigan, but you may be. The last five years have been extreemly (damn, I always put in that extra e...) good to home owners. There have been very few places that have seen no movement or declines in RE. Now something else to consider: LV has seen the highest, or nearly so, appreciation in property values in the nation. Some of these places may actually see a bit of a bubble burst.

I am still bullish in Portland OR as our city has not had the same insane increases that the rest of this coast has seen. I'm buying another this spring.

psw

[FishNChips]

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I know you don't WANT to buy. Sometimes I don't WANT to push very small edges at the poker table, but I do. Buying a house even in a slow market is major +EV compared to renting. You are throwing money away by renting, bottom line. If you pay 1000/month, that is 12,000 for 5 years, or 60K down the drain. Maybe you save money for a down payment five years from now, maybe not. If you buy, get a loan with no down payment, your mortgage payment will be slightly higher than 1K/month, if not equal. At the end of the 5 years, you have equity in the house, and the money you will save for the next downpayment. As long as you live in your home for two years, you avoid short term capital gains. If I were young like you, I would buy as much house as I could possibly afford, and rent a room or two to cover the majority of the mortgage payment each month. You live effectively for free, and you get all the savings that a house gives you. I am no financial advisor, so you should study these things on your own, but I find it hard to believe that someone like yourself is willing to take the risk of casinowhoring, affilating for sites, etc... would not be willing to buy a house to maximize your financial well-being. Making 100K a year and not buying a house is the equivalent of folding pocket aces on this hand so that they will pay off more on the next. Just dumb!

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Well lets see, I bought a $140,000 house exactly 5 years ago at 6% Fixed interest rate. The house is worth roughly the exact same today as it was 5 years ago. My principal has only gone down $4,700 since then. So if I was to sell my house, after real estate commisions I would probably lose a little money. Not to mention all the repair and maintenance costs associated with owning, even in a 5 year old house like mine. If I could do it all over, I would definately rent, sooooooo much easier, and so much more freedom. Not to mention I could live in a nice 3 bedroom townhouse community with swimming pool, 24 hour fitness center, and many more amnenities for less than my mortgage payment. My utility payments would be atleast 30% less in an apartment also.

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I find it hard to believe you would be +EV renting vs owning given conditions you've listed. Here's the math as I see it:

figuring 20% down, you'd have a 112k mortgage and a payment around $650/mo. Lets assume that you're rent for something similar would have been $500/mo.

After 5years (60payments) you'd have payed 30,000 in rent and you get exactly zero of it back. If you sell now and lose 6% (you can negotiate this and find better deals with realtors by the way) that's $8400. Figure $7500 on closing costs to buy and $7500 to sell that's $23,400. So you're +$6600. Add the tax breaks on the interest deductions over the years and you're ahead.

I'm not sure what maintenance costs you've had in 5 years, but if its a new house they are probably pretty minor.

Having a hard time seeing how you're losing money by owning?
FishNChips

[stoxtrader]

fishnchips -

you need to include the opportunity cost of capital (i.e. what he could have earned if he instead invested his down payment), and you are underestimating ownership costs in my opinion with a big one being insurance and another big one being property taxes.

[FishNChips]

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fishnchips -

you need to include the opportunity cost of capital (i.e. what he could have earned if he instead invested his down payment), and you are underestimating ownership costs in my opinion with a big one being insurance and another big one being property taxes.

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Good point on the opportunity cost.
I think we differ on the amount of maintenance. I've lived in new homes and didn't spend much if any on maintenance.
Property taxes is a pretty good point. 1% annual = $1400/yr = $6000 over 5yrs.

You're pretty close to break even if you don't make a penny over $140k when you sell. Not very many markets in the US that haven't appreciated even a few % over the last years.

All this said... it sounds like OP may be in a situation where renting is the right way to go.

FishNChips

[Wake up CALL]

You will save $14,000 per year alone in State income tax. Your total cost of living excluding housing should save you another $6000 minimum. Your rent has no tax advantages, 100% of the interest expense of your primary residence loan is deductible as you will be filing the 1040 form. Homes in Vegas have gone up at a whopping 40% rate last year alone. So a $180,000 home in 2004 is now worth over $250,000. Any consideration of not buying when you have an annual income of $150,000 is not solid thinking.

[kdog]

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Well lets see, I bought a $140,000 house exactly 5 years ago at 6% Fixed interest rate. The house is worth roughly the exact same today as it was 5 years ago. My principal has only gone down $4,700 since then. So if I was to sell my house, after real estate commisions I would probably lose a little money. Not to mention all the repair and maintenance costs associated with owning, even in a 5 year old house like mine. If I could do it all over, I would definately rent, sooooooo much easier, and so much more freedom. Not to mention I could live in a nice 3 bedroom townhouse community with swimming pool, 24 hour fitness center, and many more amnenities for less than my mortgage payment. My utility payments would be atleast 30% less in an apartment also

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Maybe you should move out of Michigan. My girlfriend bought the one we live in 7 years ago for $56,000. With two additions and other renovations we've put slightly over $100,000 more into it and carry a $150,000 mortgage at 5.375% fixed (refinanced two years ago). It's now worth over $300,000 and still going up. Buy, don't rent. It's your retirement safety chute if everything else goes bad.