I'm pretty sure that there's never a case where it's actually cheaper to buy than rent (given comparables, factoring in everything), unless you're getting a zero-down loan. But then you take on event risk: the market could go down during a time when you're forced to sell by reason of having to move or having lost your job, etc. How much does that "cost" ...?
This brings up a generalization: I believe that it's almost never true that money should be the tipping point of a significant decision. Take the question of: should I take this job? If you feel like you have to say no because you simply can't live on the money being offered, but it's in every other way your dream job, then it's probably time to do some soul searching. Giving money the veto on something like that is problematic. Similarly if you can tell it's going to be a shitty job, but the pay is great ...
You get the idea. For housing, there are (mostly intangible!) costs/benefits that also need to be factored in.
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If you want to do some thumbnail sketches about after-tax costs and have an otherwise relatively simple tax situation today, I recommend going to http://turbotax.intuit.com/ and just plugging in some numbers. Use last year as a baseline and take note of your effective federal and state tax totals. Add in: interest & property tax; then subtract out the difference between what you're paying for renter's insurance (if anything) and what you'd pay (post-tax) for homeowners insurance (call a local State Farm agent, and they can give you a ballpark); plus whatever interest you're presently making on what you'd be using as a down payment.
Here's an example for a single person in California:
$60,000 W-2 Income
3,650 Personal Exemption
5,700 Standard Deduction $50,650 Taxable income (aka AGI)
8,850 Federal Tax
2,987 State tax
11,837 Total income tax
California's "renter credit" expires if you make more than $34,772 in 2010.
Most banks these days won't give you a loan if your monthly payment is more than 35% of AGI, so we can back-figure about $18k/yr of payments or $1500/mo. Google Mortgage says that a $350k house with 20% down ($70k) can be had with a 4.25% 30yr loan for $1377/mo to borrow $280k. In the first year, you'll pay $11,800 of interest and $390/mo of principal. In my city, you'll pay 1.4% of the value in property taxes, or $4900. Plugging these two numbers in changes your Federal income tax to $5640 and State to $1850; a total of $7490 and a difference of $4347. Property insurance will cost you about $1k.
Your total housing cost is: $11,800 + $4900 + $1000 ($17,700) minus the tax difference of $4347 = $13,353 or about $1120/mo -- but cash-flow will be $1500/mo. Over time, your principal payments will start to get bigger (and the tax benefit will go down; by the 5th year, principal is more like $500/mo), and although you're not "paying" anyone but yourself, it does represent cash-flow that you won't see until you sell the house. And if you've had that $70k down-payment sitting in treasuries paying 1%, you'll lose that $700, too. Obviously if you've been doing something more interesting with your down payment -- pork belly futures? -- factor that in, too.
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Using a starting point of $100k/yr the baseline is $18800 Federal and $6800 State for a total of $25,600. AGI at that level can support payments of about $1800/mo. A $400k mortgage with a $80k down payment gets you a $480k house that costs $1950/mo or $16,900 of interest ($560/mo of principal) in your first year plus $6700 of property tax with the result being $13,100 of Fed and $4900 of state or a difference of $7600. Net monthly = $1950 + $560 property tax - $635 tax savings + $100 homeowner's insurance = about $1975 of cash, $1415 of actual cost.
But wait, Jordan: that looks like a pretty good deal! There's a big piece of the equation missing here, which is maintenance. I've never seen a good estimate of what you should plan on for maintenance. Some things are predictable, but: when will your roof fail? When will you have to replace the heating system? How often do you need to paint? I think a very conservative estimate is that you might have to replace your house at a rate of 1%/year. Does that sound right? 100 years from now, you'll essentially have no house left? Don't get me wrong: some houses are built to last.
Most, however, aren't.
There's another huge unknown here: how much more money will you spend on things for "your house" than you might for "your apartment" ...? Will owning a house cause you to buy more expensive furniture? When there's a problem with a system that needs repair or replament, will you "buy up" for something of higher quality/price ... just because it's yours?
Anyway, I think you get the idea about the tax implications; but I hope it's also clear that it's not the only input to a decision like buying a house.
This is also a pretty interesting starting point:
http://www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx
This gives a similar answer to mine:
http://www.bankrate.com/calculators/mortgages/new-house-calculator.aspx
/jordan