rent vs buy - a cost comparison, page-3

One thing in favour of the purchaser over the renter that the figures don't seem to account for is rental return and tax benefits.

You would be mad to live in the house after you buy it. Rent it out, and rent something that costs you the same as that which you are receiving off your IP.

Rent the house next door to the one you own if you must.

Cash flow situation is exactly the same, but you get some tax relief on your interest and other expenses.

Using your example, you would:

* Rent your house out for $480 pw, and it costs you $865 pw.

* Rent somewhere else for $480 pw, meaning you are out of pocket the same $865 pw as you would have been if you lived in your IP.

* Get a tax return on the $385 pw difference between what it costs you to run the IP and what you receive from it.

= a $20k reduction on your taxable income for the year.

Obviously very rough figures, just highlighting a point.

I am shocked by the amount of friends I have that live in the places they are paying off and receive no tax benefits.