Decision To Buy Or Rent Depends On Location And Cost

Added March 20, 2009 by Ilyce R. Glink

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Summary: Deciding whether it’s a smarter financial move to rent or to buy often depends on where you’re located and the cost of property in the area. If you’re going to move often, buying a home might not be as lucrative, considering the costs of buying and selling. One good option for buying could be a fixer-upper.

Q: Do you think it would be wise for us to purchase a home or continue to rent? My husband is in the military so we are going to be relocating a lot, probably every two years.

A: I think it depends on where you are, and how much you'll have to pay for the property. It's tough to make money on a house if you're moving every 24 months, because you have costs of purchase and costs of sale.

The good news is that if you do make any money, you'll be able to keep the profits under current IRS rules. The law says if you live in a home for 2 out of the last 5 years, you can keep up to $250,000 in profits (up to $500,000 if you're married) tax free.

If I were you, I'd work on finding a fixer-upper. Over the two years you live in the property, you can fix up the home and then hopefully sell it for a profit.

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