Not knowing what your normal montly bills are, or what kind of winters you have there I can't say if the higher rent with heat/water included makes good financial sense or not.
I'd say sit down with your heat/water bills and figure your average for at least 2 years and find out if that additional $120 is actually as high as you think.
Where I live winters are cold, and just the savings in the heat bill alone would be enough I'd take it.
Good luck either way.
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