You are in the 10% tax bracket The apartment sets for $1000 per month Your monthly mortgage payments would be $1900, of which an average of $1600 per month goes toward interest during the first year Determine whether renting or buying is cheaper inom of monthly payments during the first year. Assume you are itemizing deductions Is it cheaper town or to rent? O O It is cheaper to own lis cheaper to rent Click to select your answer Type che
Accepted Solution
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Answer: it is cheaper to rent then buying cost.Step-by-step explanation:Given data:percentage of tax bracket = 10%cost of apartment for per month = $1000Mortgage payment for month is $1900average payment as interest = $1600 cost after renting [tex]= rent\times (1- tax)[/tex] [tex]=1000\times (1 - 0.10)[/tex] = $900cost after mortgage payment [tex]= mortgage - tax\times interest[/tex] [tex]= 1900 - 1600 \times 0.10[/tex] = 1900 - 160 = $1740 As we can see cost after mortgage is higher than renting therefore it is cheaper to rent then buying cost.