THINGS BEING EQUAL it's almost always better to own your home rather than to rent. After all, you build equity and get to write off your mortgage interest. And if you play your cards right, when you sell you'll be eligible for one of the best tax breaks around. But that doesn't mean that everyone should be a homeowner. If your move is short-term or if interest rates are high and property values outrageous, it may be worthwhile to deal with a landlord for a while. Our worksheet will help you determine which path is best.
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To Rent or to Buy?
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Number Crunching
Fact of the matter is that while home ownership will give you security, it almost certainly won't give you the returns you could find in the stock market. If history is any indicator, then you can reasonably expect a 10% annual gain on your equity portfolio. Home prices, on the other hand, typically follow the rate of inflation. But home ownership has another advantage on its side. Thanks to the Taxpayer Relief Act of 1997, married couples can earn up to $500,000 in gains on home sales tax-free. Singles get $250,000.
Other Factors
Of course, deciding to buy a home is more than a strict financial decision. For most of us the thought of constantly worrying about losing our security deposit every time we pound a nail into the wall does not appeal. And quite frankly, once those babies come along, you want the freedom to paint their bedroom walls any color you want. So, here are some other things to consider before making your purchase.
This may sound simplistic, but first and foremost you should find a neighborhood and a home that you just plain like. "You're not going to wake up in the middle of the night and say 'Wow! Look at my tax deduction!'" says CFP Lewis Wallensky.
Moreover, you should check on the sales price trends of homes in that neighborhood. If it looks like the area is declining in value, then avoid commitment: You're probably better off renting.
And finally, don't forget that even with the tax-breaks, you will still be incurring out-of-pocket costs that you wouldn't encounter as a renter -- from the cost of ripping down that God-awful wallpaper to repairing a leaky roof. Estimate how much those costs will be. Obviously you're not going to be doing yourself a lick of good if you're living hand-to-mouth, even if it's in your own home.
To Rent or to Buy
Pros Cons
Renting Flexiblity (can relocate easily) No equity
Can invest money elsewhere (market) Annual rent increase could outpace inflation
No upkeep fees (drippy faucets, broken dishwashers, etc.)
Buying Tax-break: deduct mortgage interest, property taxes Property tax and upkeep
Potential tax-free capital gain Mortgage costs
Emotional satisfaction Less Flexibility Could Lose Principal
Financing
If you do decide to buy, then it's in your best interest to put down at least 20% of the purchase price. That way you can avoid private mortgage insurance (PMI), which is required by banks when borrowers put down less than 20%. Should you put less than 20% down, however, you should be informed when you reach the 20% equity mark which, in turn means you can cancel this added expense. (It used to be that many uninformed home owners continued to pay PMI even when they didn't need it.)
Tapping Your IRA
Congress has a soft spot for first-time home buyers. Now IRA owners can withdraw up to $10,000 as a lifetime credit penalty-free (but not tax-free) for the purchase of a first-time home. That means you and your spouse together can withdraw up to $20,000 (as long as each of you pulls $10,000 from your own accounts). It also means that your relatives can raid their own IRAs penalty-free to make a gift to you for a first-time home purchase.
Believe it or not, you can actually use the first-time home-buyer exemption more than once. You simply must not have owned a home during the previous two years. But don't get too excited: No matter what, each person is limited to $10,000 over a lifetime.
Borrowing From a 401(k)
Even though it is an option, withdrawing money from your 401(k) to fund a home purchase is a rotten idea. You'll owe taxes plus a 10% penalty. You will also cripple your retirement savings, since most plans won't allow you to contribute to your plan for at least a year following a withdrawal. That means you're going to lose out on your company match as well as future tax-deferred contributions, not to mention the earnings on the money you've withdrawn.
Borrowing from a 401(k) isn't that much better. Sure, you'll avoid taxes and penalties, but this would only make sense if you are earning less on your 401(k) than the cost of your mortgage. Furthermore, if you leave the company, you run the risk that your loan will be called immediately.
Thứ Hai, 28 tháng 1, 2008
Renoir's Montmartre House
A longtime Parisian home of Impressionist painter Pierre-Auguste Renoir is on the market for €3.75 million (about $5.5 million), reduced from its listing last year of €4.5 million.
Known as the Château des Brouillards (mists), the 18th-century stone house was also the childhood home of famed filmmaker Jean Renoir, the painter's second son. The house is in Montmartre, the Bohemian enclave that lured Pablo Picasso, Vincent van Gogh and many other artists. The neighborhood figures in Renoir's 1876 masterpiece "Le Moulin de la Galette," as well as the work of Henri de Toulouse-Lautrec.
[Slideshow]The four-floor, 3,200-square-foot stone house has four bedrooms and a concierge's apartment. There's a front garden and a 1,200-square-foot interior garden. The current owner's family has held the property for about half a century and hasn't renovated the interior, says listing agent Xavier Attal, of Immobest International in association with Quintessentially Estates and Prestige Properties.
Jean Renoir, who directed "Grand Illusion," wrote extensively about the Château in a memoir of his father, who died in 1919 at 78, calling it an "odd conglomeration" of buildings "perched high above the Paris mist" whose hedge let its inhabitants live "in a world apart."
NBA's Baron Davis Sells Pair of Condos
NBA point guard Baron Davis of the Golden State Warriors has sold a pair of adjacent condos in Los Angeles for $2.66 million.
The 11th-floor units are in the same West Hollywood high-rise where reality- television star Nicole Richie sold her apartment for $2.25 million in December. Known as Empire West, the building has a rooftop pool, a valet, a gym, tennis courts and a 24-hour doorman.
Mr. Davis, 28, paid $1.1 million for the one-bedroom apartment and $1.25 million for the two-bedroom in 2006. He listed them for $3.25 million in November. The units, which aren't combined, together measure 3,900 square feet and have a total of three balconies, three bathrooms, two powder rooms and views of the Hollywood Hills and the city.
Mr. Davis, a two-time NBA All-Star, also owns homes in New Orleans and San Francisco, according to his listing broker, Max Shapiro of Westside Estate Agency. Ms. Richie's apartment was one floor below Mr. Davis's.
Banker Warren Woo Pays $22 Million
Investment banker Warren Woo has paid $20 million for a house in Los Angeles, plus $2 million more for furnishings.
The 47-year-old Mr. Woo was until last year the global head of UBS's leveraged finance and private equity coverage group. He recently joined the Swiss bank's former investment-banking head, Ken Moelis, at his new Los Angeles-based boutique investment bank, Moelis & Co.
Located in the Holmby Hills neighborhood, the 1997 Georgian traditional home has seven bedrooms. The one-acre property has a pool, tennis court, elevator and five-car garage, according to the listing. The '97 house replaced a residence once owned by Irene Dunne, a leading film actress in the 1930s and 1940s, according to listing broker Christophe Choo of Coldwell Banker. Jade Mills of Coldwell represented Mr. Woo, who couldn't be reached for comment.
Steve Y. Kim, the president and chief executive of Xylan Corp., a data-networking company acquired by Alcatel in 1999 for $2 billion, sold the house to Mr. Woo. Mr. Kim, who couldn't be reached for comment, listed the house in 2006 for $29.5 million and cut the price in May to $26.5 million, according to listing information.
Mr. Woo previously worked for Drexel Burnham Lambert and Donaldson Lufkin & Jenrette. In December, he became a part-owner of pro hockey's Nashville Predators and of Powers Management, which operates the Tennessee city's Sommet Center, where the Predators play.
Known as the Château des Brouillards (mists), the 18th-century stone house was also the childhood home of famed filmmaker Jean Renoir, the painter's second son. The house is in Montmartre, the Bohemian enclave that lured Pablo Picasso, Vincent van Gogh and many other artists. The neighborhood figures in Renoir's 1876 masterpiece "Le Moulin de la Galette," as well as the work of Henri de Toulouse-Lautrec.
[Slideshow]The four-floor, 3,200-square-foot stone house has four bedrooms and a concierge's apartment. There's a front garden and a 1,200-square-foot interior garden. The current owner's family has held the property for about half a century and hasn't renovated the interior, says listing agent Xavier Attal, of Immobest International in association with Quintessentially Estates and Prestige Properties.
Jean Renoir, who directed "Grand Illusion," wrote extensively about the Château in a memoir of his father, who died in 1919 at 78, calling it an "odd conglomeration" of buildings "perched high above the Paris mist" whose hedge let its inhabitants live "in a world apart."
NBA's Baron Davis Sells Pair of Condos
NBA point guard Baron Davis of the Golden State Warriors has sold a pair of adjacent condos in Los Angeles for $2.66 million.
The 11th-floor units are in the same West Hollywood high-rise where reality- television star Nicole Richie sold her apartment for $2.25 million in December. Known as Empire West, the building has a rooftop pool, a valet, a gym, tennis courts and a 24-hour doorman.
Mr. Davis, 28, paid $1.1 million for the one-bedroom apartment and $1.25 million for the two-bedroom in 2006. He listed them for $3.25 million in November. The units, which aren't combined, together measure 3,900 square feet and have a total of three balconies, three bathrooms, two powder rooms and views of the Hollywood Hills and the city.
Mr. Davis, a two-time NBA All-Star, also owns homes in New Orleans and San Francisco, according to his listing broker, Max Shapiro of Westside Estate Agency. Ms. Richie's apartment was one floor below Mr. Davis's.
Banker Warren Woo Pays $22 Million
Investment banker Warren Woo has paid $20 million for a house in Los Angeles, plus $2 million more for furnishings.
The 47-year-old Mr. Woo was until last year the global head of UBS's leveraged finance and private equity coverage group. He recently joined the Swiss bank's former investment-banking head, Ken Moelis, at his new Los Angeles-based boutique investment bank, Moelis & Co.
Located in the Holmby Hills neighborhood, the 1997 Georgian traditional home has seven bedrooms. The one-acre property has a pool, tennis court, elevator and five-car garage, according to the listing. The '97 house replaced a residence once owned by Irene Dunne, a leading film actress in the 1930s and 1940s, according to listing broker Christophe Choo of Coldwell Banker. Jade Mills of Coldwell represented Mr. Woo, who couldn't be reached for comment.
Steve Y. Kim, the president and chief executive of Xylan Corp., a data-networking company acquired by Alcatel in 1999 for $2 billion, sold the house to Mr. Woo. Mr. Kim, who couldn't be reached for comment, listed the house in 2006 for $29.5 million and cut the price in May to $26.5 million, according to listing information.
Mr. Woo previously worked for Drexel Burnham Lambert and Donaldson Lufkin & Jenrette. In December, he became a part-owner of pro hockey's Nashville Predators and of Powers Management, which operates the Tennessee city's Sommet Center, where the Predators play.
Thứ Bảy, 22 tháng 12, 2007
Real Estate Directory
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