Consider the pros and cons of renting versus buying a home to see what makes the most sense for you.

Buying: The pros

-> Tax perks. Mortgage interest is tax-deductible up to a limit of $1 million. Plus, if you sell your principal residence for more than you paid, you can exclude from taxes up to $250,000 of the profit, or $500,000 if you�re a couple who files jointly.

-> Build equity. Every time you pay your mortgage, you gain more equity in your home. Plus, if property values increase, so will your home equity -- the difference between what the property is worth and how much you still owe on your mortgage.

-> Security. Home ownership gives you a sense of permanence. You have the security of knowing you can live in your home for as long as you want.

-> No strings. Buying a home gives you the ability to live on your own terms. There�s no lease or landlord. Nor are there any restrictions on pets, smoking, painting or renovating. If you buy a condo, you will have to comply with the regulations of the condominium corporation and, most likely, the homeowner�s association.

-> Sense of pride. Owning your own home is a big accomplishment. You can take pride in your achievement.

Buying: The cons

-> Long-term commitment. It�s not usually advisable to buy a home if you plan to sell it within a couple of years. You may not be able to recoup all of the buying costs.

-> Added expense. Mortgage payments are usually higher than rent. And there are other expenses that accompany home ownership: property taxes, insurance, utilities and home repairs.

-> More responsibility. Being King or Queen of your castle brings added responsibilities. You won�t be able to call the landlord if you have problems with a leaky dishwasher, broken furnace or other domestic malfunctions that need attention.

Renting: The Pros

-> Costs less. Today�s low mortgage rates have made it more affordable to buy a home than it once was but, at the end of the day, it�s still usually cheaper to rent.

-> Less responsibility. If the air conditioning breaks down, you can just call the landlord. When you rent, it�s not your problem. There�s no skin off your back if property taxes and mortgage rates increase or the real estate market takes a nosedive. You just pay your rent (and possibly utilities depending on your lease) and get on with your day.

-> More freedom. Renting requires minimal commitment. Besides paying first and last month�s rent, you�ve most likely only got a yearly lease to contend with. So, renting may be ideal if you don�t have a steady job, if you�re new to the city or if you�re contemplating moving abroad in the foreseeable future.

Renting: The Cons

-> No equity. You may be spending less than you would if you owned, but you�ll never see a cent of that money again. When you rent, you�re helping someone else pay down their mortgage. You�re not building up your own personal net worth.

-> More restrictions. As a tenant, you have to live by your landlord�s rules. That could mean no pets, no guests or no painting the walls your favorite color.

-> No guarantees. You may find the rental unit of your dreams. But there�s no guarantee you can live there as long as you want. It�s not uncommon for tenants to be forced to leave if the owners sell the property or decide to move into the unit themselves.


Source: http://www.realestate.com/tipsandtools/Your-First-Place/Should-you-rent-or-buy-a-home.aspx