The problem presented is asking you to decide whether it is cheaper to rent or own a home, based on given tax and expense information. Here’s how we can approach solving part (a):

Known Information:

1. Rent: $1350 per month.
2. Mortgage: $1600 per month, of which $1300 goes toward interest.
3. Tax bracket: 24%.
4. Deductible expenses:
   • Charitable donations: $4300.
   • State and local taxes (SALT): $9000.
5. Standard deduction: $12,550 (2021 value).

Approach:

1. Deductions for owning the house:

   • Mortgage interest deduction: $1300 per month, or $15,600 annually.
   • Total deductions (charity, SALT, mortgage interest):
     $15,600 + 4,300 + 9,000 = 28,900$
   • Compare this total deduction to the standard deduction of $12,550. Since $28,900 is higher, you would itemize deductions instead of taking the standard deduction.

2. Tax Savings:

   • Tax savings from itemized deductions:
     $28,900 \times 24\% = 6,936 \text{ per year, or } 578 \text{ per month}.$
   • After tax savings, the effective monthly mortgage payment is:
     $1600 - 578 = 1022.$

3. Comparison:

   • Renting costs $1350 per month.
   • Owning the house (after tax savings) costs $1022 per month.

Thus, it is cheaper to own the house, with a monthly expense of $1022.

Let me know if you'd like more details on any part of the calculation!

Follow-up questions:

1. What are the tax implications of choosing to own vs rent in different tax brackets?
2. How do changing interest rates affect this calculation?
3. What would happen if the rent was higher than the current mortgage payment?
4. What are the long-term financial benefits of owning a house vs renting?
5. How would the calculation change if the deductible expenses increased?

Tip:

Always consider both short-term costs and long-term financial benefits when comparing renting and owning.