I never said you don't take interest payments into account. To first order, Mortgage Interest = Rent. What I was disagreeing with is that the previous poster wasn't taking RENT into account in the rental scenario. Rent is EXACTLY like mortgage interest in that you never get your rent back.
And my definition of breaking even was after interest, taxes, closing costs (both from buying and selling,) etc and APPRECIATION, you walk away with what you had BEFORE you even bought the house (again, if you want to get fancy, you can factor in inflation as well.) It is impossible to break even when renting -- you can only lose money. .
I think we're just talking past each other. I think we actually agree. I wouldn't phrase it as "impossible to break even when renting." That seems to suggest that home owners generally do better than breaking even (which they do not, by your definition). Let me explain with a simplistic example. Two dudes need a place to live for four years. They both have $100,000 in their pocket today and don't plan to have any income at all during the next four years. They also don't have enough deductions to itemize. Dude # 1 decides to buy a home. He finds a nice $125,000 bungalo, and puts $25000 down on it. He secures a 6% loan on the $100,000 left. He pays an additional $300 a month in upkeep, property taxes, utitilies etc. Dude # 2 rents the home next to Dude # 1. The rent (inclusive of utilities) is $850 per month.
Dude # 1's house appreciates 3% the first year, 3% the second year, 4% the third year, and depreciates by 3% the last year. His closing costs were all paid when he bought (he's a great negotiater) but ended up costing him about 7% of the price of the house when he sold out. His expenses look like this:
P&I payments: $28,779 (about $600 per month)
Property taxes/upkeep/utilities: $300 x 48= $14,400
Closing costs: $9336
His assets look like this:
Principal paid down:$5386
Appreciation: $8673
Down payment: $25,000
He walks away with $61,544, or a LOSS of over $38K.
Dude # 2's expenses include:
Rent: $850 x 48= 40800.
His assets include:
$2563 earned on the $25K not used as a downpayment (MMF yields 5%)
He walks away with $61763 or a LOSS of over $38K.
Personally, I would describe both dudes as having broken even. You, however would describe both as having lost money.