“Contrary to popular opinion, it’s not always better to buy a home,” says Noah Rosenfarb, CPA, ABV, PFS, CDFA, Managing Director of Freedom Wealth Advisors in Short Hills. “You have to consider a variety of financial and non-financial factors.”
As a homeownership incentive, the government allows for both mortgage and real estate tax deductions. “As a result, a homeowner will pay less in tax than their neighbor who is renting the same home and earning the same salary,” according to Rosenfarb. Although there is no steadfast rule regarding how much of your monthly income should go toward rent or a mortgage, a good rule of thumb is about 25% of your gross income for rent and up to 33% for a mortgage.
What about the non-financial considerations? “These are just as important, if not more important,” advises Rosenfarb. Does your chosen field of work leave you prone to relocation in the near future? Will your family situation render a household move necessary in the next few years? Renting may be a good choice so that you can relocate without the hassle of buying or selling a home.
To listen to a free podcast on this and other helpful financial topics, check out the NJSCPA’s award-winning podcast series at www.moneymattersnj.com/resources/podcasts.cfm.
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