11 Reasons to Avoid Homeownership

Forbes’ tax expert, Kelly Phillips Erb, recently listed 11 reasons why, after 15 years of homeownership, she sold her house and declared she’ll never buy one again.  They are:

1. "As investments go, it’s not always a great deal." (Why? Because appreciation is often based on inflation, and similar appreciation occurs with other investments (e.g., market investments).)
2. "The mortgage interest deduction doesn’t make up for the fact that you’re still paying a lot of interest."
3. "Homes often tempt people to borrow more than they can afford." (For example, the income tax deduction for home mortgage interest payments is often mentioned as a sell point to boost sale prices.)
4. "Owning a house subject to a mortgage drives up debt to income ratios." (While mortgage payments are considered a debt, rental payments are considered an expense.)
5. "A mortgage is typically 20 or 30 years while, at any given time, the current administration has only four (or possibly eight)." (Because a new president or Congress might eliminate the deduction, one cannot count on the home mortgage interest deduction existing for the life of the mortgage.)
6. "A mortgage is typically 20 or 30 years, which can limit your mobility." (A study found high rates of homeownership lead to higher rates of unemployment because homeowners find it difficult to move to areas with better job opportunities.)
7. "Houses take a lot of your money." (Most home improvements are not deductible expenses, and while some may increase a home’s selling price, one is unlikely to recover fully investments upon sale.)
8. "If you do hit the home appreciation jackpot, there can be significant taxes." (When selling a home for a large profit, the sale may be subject to capital gains and Medicare taxes.)
9. "I like for things to be predictable and real estate taxes can vary." (Mortgage payments remain flat over the mortgage’s term, but the property taxes on the home could change from year to year.)
10. "You can’t deduct a loss on the sale of your home."  (But one can if money is lost on stocks or business investments.)
11. "It’s getting more difficult to claim the itemized deduction." (This means that fewer people are able to claim the mortgage interest deduction.)