Case 1 Michael and Jonathan Weigh the Benefi ts and Costs of Buying Versus Renting

(a) Does the home buyer enjoy tax advantages? Explain.

(b) Discuss Jonathan’s belief that cash fl ow is better with renting.

(c) Suggest some reasons why Michael might consider renting rather than purchasing housing.

(d) Suggest some reasons why Jonathan might consider buying rather than renting housing.

(e) Is there a clear-cut basis for deciding either to rent or to buy housing? Explain why or why not.