| The financial benefits of owning your own home are significant. Unlike rental payments, "Mortgage Payments" on a home are fixed and don't go up like rent, and with every payment you are building home equity and tax benefits. In our example below, a single person with an annual salary of $40,000 has itemized deductions of $2,000 without owning a home. Since $2,000 is less than the Standard Deduction of $3,600 this person would use the Standard Deduction if renting. The person buys a condo or a single-family unit with an annual mortgage principal, interest and property tax payment of $12,000 ($1,000 per month). Description | Renting | Buying | Wages | $40,000 | $40,000 | Standard Deductions | $3,600 | | Itemized Deductions | | ($14,000) | Exemptions (1) | ($2,300) | ($2,300) | Taxable Income | $34,100 | $23,700 | Income Tax - Federal | $6,753 | $3,841 | Income Tax - State | $1,901 | $1,050 | Total Tax | $8,734 | $4,891 | W-4 Exemptions | One | Six | Approx. Mo.. Take-home Pay | $2,274 | $2,574 | | | |
How Much Rent Will You Pay? (Assuming a 5% annual rent increase) MONTLY | (3) YEARS | (5) YEARS | (10) YEARS | (30) YEARS | $800.00 | $30,240 | $52,800 | $117,600 | $496,800 | $900.00 | $34,020 | $59,400 | $132,300 | $558,900 | $1000.00 | $37,800 | $66,000 | $147,000 | $621,000 | $1100.00 | $41,580 | $72,600 | $161,700 | $683,100 | $1200.00 | $45,360 | $79,200 | $176,400 | $745,200 | $1300.00 | $49,140 | $85,800 | $191,000 | $807,300 | $1400.00 | $52,920 | $92,400 | $205,800 | $869,400 | $1500.00 | $56,700 | $99,000 | $220,500 | $931,500 |
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