Figure it out
Let's have a look at the figures. Let's say you're in the market for a three bedroom home in Baulkham Hills, in Sydney's Hills district. You can rent a three bedroom house in this area for roughly $380 a week.
To buy a similar house would cost you around $400,000. If you had a deposit of $80,000 to put down on the house, the Commonwealth Bank quotes monthly repayments of $2,069 on a $400,000 loan, which equates to weekly repayments of $477.46, based on an interest rate of 6.04 percent.
So clearly, it's more expensive to buy than to rent - but not by much. It's also worth looking at the other advantages of owning rather than buying, and factoring these into your decision-making process about buying or renting.
Biggest advantage
One of the greatest advantages of buying your own home is that it gives the family an asset, a fantastic benefit for any family - as long as you have the means to pay the mortgage.
But there's also another great advantage to buying over renting. In Australia, we are very fortunate to be able to take advantage of a tax rule that means we do not pay any capital gains tax on the family home.
This means that if you sell the family home, you don't have to pay any additional tax if the value of your home has risen when you sell it since the time you bought it.
No other asset is treated this way for tax purposes: if you buy shares, for example, when you sell the shares you will immediately be exposed to capital gains tax, assuming you have made a profit on the shares.
The carve out in the capital gains tax laws for the family home means buying your own home makes good sense from an investment perspective.
There are, of course, advantages to renting as well. If you rent, you don't have to spend any money on maintenance of the house and you don't have the responsibility of meeting mortgage repayments.
But you also have less security than if you own your own home because you can be served an eviction notice at the owner's discretion - even if you've always paid your rent on time - if, for example, the owner wants to move into the property.
The Australian Federal Government has also made it very attractive to buy your own home at the moment, thanks to the $14,000 grant first home buyers receive, as well as the $21,000 grant people who are building their own home for the first time get.
Ultimately, the decision to buy your own home rests on your ability to repay a mortgage; it's important to make sure you can meet the repayments before you go ahead and get a home loan. But if you have the means to save a deposit and can pay back a home loan without too much of a stretch it makes real sense to own your little piece of Australia.
From Yahoo7 Finance - David Koch
