Joe 's Blog


Renting isn't dumb - why buy something that will be worth less?

Before you fly off the handle & think that those are my words let me stop you & say that was an email I received from someone that saw one of my ads.  My response was in several parts

  • As your rent continues to rise, your mortgage stays the same. 
  • In 5 years when you are paying an extra $150 per month, you will actually have some equity in your home
  • When you look at your effective tax bracket after deducting your mortgage interest, let's see how much more you get back which in turn lowers your payment even more
  • Then there's that one little thing that just doesn't mean that much. It's called pride.  Knowing that you actually own the home.  Knowing that it is yours.  As if that's not enough!

I just don't get it some days.  I mean it's the American Dream.  I started really looking into it & I found something great on last night about your home & having a home office:

Home offices

Here's where, in my opinion, the IRS actually crossed the line. But since it was in favor of the taxpayer, I'm not going to complain.

Let's say you use 20% of your house as a home office and you deduct depreciation and expenses for working in
that part of the house.

In the past, when you sold your house, 20% of the gain wouldn't qualify for the exclusion because that 20% wasn't used as a "residence." It was used exclusively as your office.

Now, the IRS doesn't care even if you used your home 90% for business as a home office. You can now exclude as much as 100% of your gain, up to the $250,000/$500,000 limit.

You're going to be subject to tax only on the gain to the extent of depreciation taken on the building since May 7, 1997. But that's taxed only at a rate no more than 25%.

Wow! That means, if you qualify, there's no reason not to claim a home office. And I know there are any numbers of people who work out of their homes who don't claim home offices now.

Dorothy was right: "There's no place like home." At least for now.

For help or questions contact:

Joe Gonzalez

Senior Loan Consultant -  NMLS #126036
GMH Mortgage Services, LLC
625 W. Ridge Pike, Building C, Suite 100 | Conshohocken, PA  19428 | Direct: 610-355-8039 |  Cell: 610-739-6563

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Comment balloon 2 commentsJoe Gonzalez • November 04 2008 08:10AM


Joe, great post!  I agree with you about all of the buying versus renting scenarios!!  Thank you so much for the new info on the home office deduction.  It is something I have always been afraid to take in the past, but it seems like it might make sense now.  Thanks for the good info!

Posted by Lisa Friedman, Central New Jersey Real Estate (Alliance Realtors) over 11 years ago

I rent a space with my real estate office and like you said, there is no place like home.  As I am looking at good cost saving cuts in my business, the rent I pay to the benefit is out of line.  So I will move back home where the enjoyment of savings on gas and hands on my files, etc is more convenient.  Tax breaks and pocket savings makes this the best choice.  Just to learn to discipline myself not to work, work , work because it is there all the time and easy to walk in the study to do.  Good thoughts!

Posted by Connie Goodrich, CRS ABR (McKinney Realtor)Texas (Keller Williams Realty) over 11 years ago