Hello all, I'm hoping for a little help from the MMM brain trust. My girlfriend and I have begun thinking seriously about purchasing a condo (I fully expect she will become my wife in an approximately 12-18 month window). As the designated financial expert of the relationship I've begun crunching numbers in earnest.

I started by using the NYT rent vs buy calculator:

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0It's great. I really like how thorough and easy to use it is. However, I get the feeling it is overstating the value of the potential tax benefits. See the detail of my inputs, and how much I think the calculator is attributing to tax incentives, below. I think the calculator assumes that you are already an itemizer and therefore overstates the tax benefits greatly because it doesn't factor in the value of the standard deduction that I would otherwise take as a renter. I'm not sure about this though and can't come up with concrete proof that it is flawed. It seems as though if the calculator were to properly address this very complicated calculation it would require more inputs.

This is frustrating and I want to address it. My thought process is that if I could remove the tax portion of the NYT calculator (by switching the marginal tax rate to zero) then do the tax incentive calculation on my own, and then adjust the output from the NYT calculator I would get a pretty reasonable estimate of the true rent vs. buy analysis.

I have attached a spreadsheet which essentially does the following:

-Calculates my Year 1 deductible itemized expenses as a potential homeowner: Yr 1 interest, Yr 1 property taxes, and Yr 1 State and Local taxes (can't think of any other deductions that I would qualify for).

-Subtracts the Standard Deduction (I'm looking at this analysis as though we will be married)

-Mutliplies my marginal tax rate by the difference between my potential itemized deductions and the standard deduction I would otherwise take as a renter.

This math yields a monthly tax incentive of about $150. Roughly half of what the NYT calculator seems to be implying.

I'm looking for feedback in the following areas:

A.) Confirm that my take on the NYT rent vs buy calculator is correct. That it is oversimplifying the tax benefits and does not account for the standard deduction.

B.) Confirm that my spreadsheet seems to be calculating the actual tax incentive correctly.

C.) Confirm that my strategy of taking the NYT calculator and zeroing out the marginal tax rate, then further adjusting the output by using my spreadsheet would yield a good estimate of the true rental breakeven point. Example from the inputs I'm currently working with would be $1,714 (NYT output with marginal tax rate of zero) minus $150 (estimate of monthly tax savings from my spreadsheet) would equal a true rental breakeven point of $1,564.

I realize this may be overly detailed, hopefully it doesn't sound like a homework assignment - but I'm very curious as to what the forumers have to say about this. I was shocked by how little I could find by googling that addressed all these concerns in one place.

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Details from my NYT calculator:

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Price: $265,000

Term: 5 Years

Mortgage Rate: 4.0%

20% Down Payment

30 Year Mortgage

2.5% Home Price Appreciation

2.5% Rental Increase Rate

6.5% Investment Return

2.0% Inflation Rate

Property Tax Rate 1.51% (About 4k)

Marginal Tax Rate - 30% (more on that later)

Costs of buying - 4%

Costs of selling - 6%

.75% Maintenace/Renovation

.30% Homeowners Insurance

$0 - Utilities that would otherwise be covered by landlord

$300 - Monthly common fees

0% - Common Fees Deduction

1 month security deposit rental cost

0% broker fee

1% rental fee

This yields a rental equivalent break-even point of $1,422. However if I switch the marginal tax rate to zero (negating that aspect of their calculation) the breakeven point becomes $1,714. A potential tax incentive of $292 per month - strikes me as too high.