The Tax Advantages of Owning your own Home

My two adult kids, longtime apartment dwellers are now shopping for homes or condos in one of the most inflated real estate markets in the US. I lived in the same area 50 years ago, when houses that now sell for over a million could be purchased for under $30,000. Should I have bought then? I was making $75 a week then and could just barely afford a $75 a month apartment.

My point is: is there really a tax advantage in owning your own home in 2007? Especially in areas where home prices are grossly inflated. In fact, one of my kids bid on a condo several weeks ago. The offer was for $25,000 less than the asking price. However, the condo sold to the highest bidder, who actually ADDED $25,000 to the asking price and also agreed to take over the condo as is, without an inspection, no matter what the condition. Under inflation circumstances such as this, is it really advantageous to own a home today?

I haven’t done heavy math on it, but I’ll try some sketchy figuring. Two-bedroom apartments in the same area rent for $1,000 a month. With utilities, it goes to $1,200. If one purchases a $500,000 home nearby in this inflated area, the mortgage is at least $3,000 a month, with many more added costs: insurance, utilities, upkeep, taxes and so on. This means about a monthly outlay of $3,500. I know, of course, all the advantages of tax relief and the hope that when the house is sold there are more tax deductions. And, of course, the hope that the price will rise at the same inflation rate gain we have now, and selling the house will be relatively quick. Of course, that is all speculation. There are also horror stories of foreclosure if you lose your job and can’t pay your mortgage. Then you lose everything.

My question: In today’s real estate market, is there really any great advantage any more, taxwise or otherwise, in buying instead of renting?