Rent vs. Buy Calculator
Should you rent or buy? Compare the true financial impact over time, factoring in mortgage costs, home appreciation, tax benefits, investment returns, and net worth growth.
🏠 Buying
🏢 Renting
| Buying | Renting | |
|---|---|---|
| Home Value | $0 | - |
| Remaining Mortgage | -$0 | - |
| Investment Portfolio | - | $0 |
| Net Financial Position | $0 | $0 |
| Assuming you stay in the home. Equity = Home Value - Remaining Mortgage. Tax savings of $0 are already factored in. | ||
- Time horizon matters most: Buying almost always wins if you stay 7+ years. Renting usually wins for stays under 3 years due to high transaction costs
- Don't forget opportunity cost: Your down payment could be invested in the stock market. Over long periods, equities have historically returned 7-10% annually
- Appreciation is not guaranteed: Home values can decline. The 2008 crisis saw 30%+ drops in some markets. Use conservative estimates (2-3%)
- Hidden costs of ownership: Major repairs (roof, HVAC, plumbing) can cost $5K-20K+ and aren't captured in the 1% maintenance estimate for newer homes
- Tax law update (2026): SALT deduction capped at $40K ($10K for income over $600K). Mortgage interest deductible on first $750K of debt. PMI premiums are now deductible. Many homeowners still take the standard deduction
- Non-financial factors: Stability, customization, and pride of ownership have real value. So does the flexibility and mobility that renting provides
- Capital gains exclusion: When selling your primary residence, you can exclude up to $250K ($500K married) in capital gains from taxes if you lived there 2 of the last 5 years
How We Calculate Rent vs. Buy
This calculator performs a comprehensive financial comparison by tracking the net worth impact of each scenario year by year. It accounts for all major costs, tax benefits, and investment opportunity costs.
For buying, we calculate the full amortization schedule to split mortgage payments into principal and interest. Only non-equity costs (interest, property taxes, insurance, maintenance, HOA, PMI, utilities, and closing costs) count as true housing costs — principal payments and your down payment build equity and are not "costs." Tax savings come from itemizing mortgage interest and property taxes (subject to SALT and mortgage caps).
Use the "Staying in Home" toggle to see your equity position if you continue living there (no selling costs). Use "Selling / Liquidating" to see what you'd actually walk away with after agent fees and closing costs — this is the traditional apples-to-apples comparison with renting.
For renting, we assume the renter invests the down payment and any monthly savings (the difference between buying and renting costs) at the specified investment return rate. Rent increases annually at the specified rate.
2026 Tax Rules Applied
This calculator incorporates the tax rules under the One Big Beautiful Bill Act (signed July 2025), which made permanent many TCJA provisions:
- Mortgage interest deduction: Limited to interest on first $750,000 of acquisition debt
- SALT deduction cap: $40,000 for 2025-2029 ($20,000 MFS), with income phaseout above $500K AGI
- PMI deduction: Reinstated starting 2026, treated as mortgage interest (phases out at $100K AGI)
- Standard deduction: ~$30,700 MFJ / ~$15,350 single for 2026 (inflation-adjusted)
- Capital gains exclusion: $250K single / $500K married when selling primary residence (2 of 5 years)
Disclaimer: This calculator is for educational purposes only. Real estate markets, tax laws, and investment returns are unpredictable. Results are estimates based on your inputs and assumptions. This is not financial, tax, or legal advice. Consult qualified professionals before making housing decisions.
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