15 Benefits of Owning vs. Renting

Owning a home is a huge financial decision that comes with lots of responsibility. Before you choose to invest in a property, you must make sure you're financially prepared and ready to take on the tasks of home maintenance and upkeep.

While it can be a lot more work to own a home, and getting into a property can cost you a lot of money, it has some huge upsides. Here are 15 benefits of being an owner instead of a renter.

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A home and a rental property both provide you with somewhere to live. But a home does more than that. It also doubles as an investment that can make you money over time.

Renting a property doesn't do that since your rent money doesn't go toward helping you acquire an asset over time as your mortgage payment does.

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Each month, you'll have a housing bill regardless of whether you rent or buy your home. But when you pay your mortgage, these payments are a type of forced savings.

Each month that you make a payment on your home loan, you build more equity in the home. You can borrow against it or cash in that equity by selling the property.

The government actually subsidizes mortgage payments by providing a deduction for mortgage interest. Mortgage interest makes up a large portion of your payment, especially at the beginning, and you can deduct interest on loans up to $750,000.

Rather than claim the standard deduction, you have to itemize to take advantage of this subsidy. But if you do, your mortgage payments effectively become cheaper because you don't pay taxes on the income you used to pay the interest on your loan.

Renters don't get this type of help with their housing costs from Uncle Sam.

ALSO READ: What Is the Mortgage Interest Deduction?

When you buy a home, you make a small down payment and borrow for the rest of your home's cost. Your initial investment is very low relative to the potential returns you can earn on your house over time.

Renters don't get this chance to use debt financing to make an investment that can pay off over time as property values rise.

Any homeowner with a fixed-rate mortgage knows how much their house will cost them over time. While property taxes and insurance costs can go up over the years, these changes aren't usually dramatic enough to cause a huge increase in monthly housing payments.

Renters, however, could find themselves facing huge rent increases -- especially if they live in an area where demand for rental housing increases dramatically and landlords become able to fetch a premium price.

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Homeowners can actually benefit from inflation because it reduces the effective cost of their mortgage payments.

Say an owner has a $1,000 monthly mortgage payment with a fixed-rate mortgage. In 10 or 20 or 30 years, their mortgage payment will not change -- but the $1,000 they use to pay it won't be worth nearly as much as it is today. Their payments effectively get cheaper over time.

Renters don't get this benefit since landlords raise rents as the prices of goods and services increase.

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Typically, there is a wider variety of real estate for sale than rent. It's possible to buy a wide range of properties -- from a condo or townhouse to a mansion -- but there may not be quite so many choices for rental properties in most markets.

Homeowners could also buy land and build exactly the property they are looking for, which renters obviously can't do.

Renters could be forced to move out of their properties -- even if they don't want to -- if their landlords terminate their lease agreements at the end of the lease terms. If a landlord sells a property or is foreclosed on, this could also lead to an involuntary move.

Owners don't have to worry about this. As long as they keep paying their loan, they can keep living in their house for as long as they want.

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Homeowners can borrow against the value of their homes while still living in them. Home equity loans and lines of credit provide affordable financing, which can come in handy for debt consolidation or home improvements.

Renters obviously don't have access to this source of affordable low-interest loans.

Owners can decide who makes repairs or upgrades to their homes and when. They have more control over who enters their spaces and when.

A renter, however, must wait for a landlord to arrange repairs and settle for the repair company a landlord chooses. They also have to work around the landlord's schedule for repairs and scheduled maintenance.

Of course, owners do have to pay for these costs, so this is one area where renters may benefit more.

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A property owner doesn't have to ask permission for any upgrades they want to make. They can also benefit from their property going up in value if they invest in improving their living space.

Renters don't have the freedom to make changes without permission and likely shouldn't spend a lot of money doing so since the landlord would benefit financially from any improvements rather than the renter.

ALSO READ: 11 Home Improvements We Can't Recommend Enough

Taking out a mortgage helps homeowners to improve their credit scores. Credit scores go up when borrowers take on debt, including home loans, credit cards, and car loans.

Renters won't have a mortgage on their credit record, making it harder to develop the diverse mix of accounts that results in the best possible score.

When you sell an asset at a profit, you typically must pay capital gains taxes. But homeowners can shield up to $250,000 in gains, or up to $500,000 if married and filing jointly, as long as they meet certain requirements, such as the home being their primary residence for two of the five years before selling.

ALSO READ: What Is Capital Gains Tax?

Homeowners who stay put in their homes long enough to repay their mortgage loans will end up only owing property taxes and insurance. This can make their housing costs very low. Often, this happens when nearing retirement, which can make living on a fixed income easier.

Renters, however, will always need to pay rent, so they won't see this big decline in their housing costs during their lifetime.

Finally, people who own their homes tend to remain in them longer. So, owners who live in a neighborhood with few rental properties will generally be able to become part of a community of long-term residents. Renters may not have that opportunity, especially if most of their neighbors are more transient.

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There are clearly ample benefits to owning a home rather than renting. Of course, it's still important to ensure you don't buy a property unless you have the money to do so and plan to stay put for several years.

If you're in a good position to buy and not trying to move soon, though, you should seriously consider looking for homes and setting down roots so that you can start reaping these benefits yourself.