Mobile Homeowner

"I have a question for you!! If you use my question in an article, please omit my last name! I am currently living in a mobile home that is paid for and has controlled rent. I can afford to buy a house but really have no desire at the present moment. The situation that I’m in has allowed me to save a good percentage of my income and invest. I’m 33 and would like to buy in a few years. Am I making a mistake? Am I losing out on a great tax break??? Is the tax break really what it is cracked up to be? The market in California is soft and I’m guessing that the environment will not change drastically anytime soon. Please let me know what you think!!!!" — Ken

Hmmm. Two conflicting things here. On the one hand, based on this sketchy info, I’d suggest that now — when the market for homes is soft — might be a good time to buy one. I wouldn’t be surprised to see California real estate prices pick up again. I think it’s already happening. Relatively speaking, stocks are pretty high and some California real estate prices not so high. A better time to buy a home rather than more shares of Coke? (A decade ago, you would surely have done better buying the Coke than the home.)

Then again, if you’re happy where you are and can continue adding to your investment portfolio, keep squirreling it away! Have you read The Millionaire Next Door? They got rich at least in part by living beneath their means.

In any event, I wouldn’t buy the house for the tax deduction. It helps you afford the mortgage and property taxes, and should certainly be taken into account when you figure what home ownership would cost you. (Also take into account repairs, insurance, lawn maintenance, repairs, utilities, painting every few years, plumbing problems and repairs.) Alone, though, the tax deduction is no reason to buy a house.