Talk:Owning vs renting

Note: One element in the home ownership equation relates to estate valuation and the estate taxation system. The net equity value of the home is an estate valuation asset (as is the value of life insurance death benefits). In combination, both of these estate value assets can greatly increase the taxable estate well beyond what many investors might think of as their invested wealth. As of now, the Congress has not addressed the return of the pre-2000 taxable estate exemptions which are scheduled to revert back into law after 2010. --Blbarnitz 02:47, 31 May 2009 (UTC)
 * Barry, I'm not sure I see your point. If I have a $4 M estate, and my choice is between having $500 K in capital gains in my home at death versus an incremental $500 K in capital gains in mutual funds, there is no difference in treatment for the home is there?  As compared to a sale during my lifetime, when the capital gains treatment difference is night and day. -Dan Kohn 19:37, 31 May 2009 (UTC)
 * The point is that housing (and insurance death benefits) can very easily exceed the personal estate tax exemption (which if memory serves, is $1,000,000 when the reversion to pre-2000 estate tax is set to occur after 2010, although congress is likely to legislate this issue by the end of 2010.) Since estate tax rates quickly reach the maximum rate at 55%, the value of a residence is not a trivial issue. (Throwing away a 1,000,000 exemption results in an approximate $550,000 estate tax due nine months after the surviving spouse dies. Married couples would need to execute A-B revocable living trusts in order to preserve each spouse's estate tax exemption.) This is especially noteworthy for community property states, since community property can be easily allocated to either trust, greatly enhancing the ability of the citizen to fully realize their lifetime exemption. Since our community property states are mostly part of the Continental (Spanish and French) legal systems, they are mostly situated in the Western US (as a function of the Spanish heritage). As you know, property values in California and the West Coast greatly exceed values in the Mid West or South. This of course is an argument for a narrow 1% to 10% of the population, who will deal with residential equity through trust structures (A-B trusts or a Qualified personal residence trust).
 * The remaining 90% are likely to either downsize the residence or go the reverse mortgage route during decumulation cycles. See Changes in U.S. Family Financesfrom 2004 to 2007: Evidence from the Survey of Consumer Finances for the state of the nations families' income, net worth, investment, and debt conditions.

--Blbarnitz 21:15, 31 May 2009 (UTC)