Most rent versus buy calculators ask users to put in an estimate of monthly maintenance costs for the home they would purchase. Both renters and homeowners pay costs for maintenance on their properties; they just do so in different ways with very different implications. This is what economists call “imputed rent,” and it is one of the subtle advantages to buying that is hard to account for in standard buy versus rent analysis. Your down payment could earn a fully taxable return as an investment, but give you a tax-free return — free rent — if used to buy a home. You could just as easily say that when you buy a home, the mortgage interest and property taxes you pay are throwing money away.

Source: New York Times June 02, 2016 10:52 UTC