Rent vs. Buy
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Income & shared assumptions

Apply to both Buy and Rent. Residual income is what you have left each month after taxes and non-housing expenses. Investment return drives the opportunity-cost portfolio; inflation inflates ongoing costs; the time horizon is the year for break-even comparison and net-sale calculations.

Residual monthly income ($)
Investment return (%/yr)
Inflation (%/yr)
Time horizon (yrs)

Rentrenting

Rental costs
Monthly rent ($)
Annual rent increase (%)
Security deposit ($)
Renting-related expenses ($/mo)
Rent$3,000
Renting-related$0
Total monthly cost$3,000
Rent in year 10$4,032
Security deposit (held)$3,000
Monthly net cash flow$7,000

Buyhome purchase

Purchase costs
Purchase price ($)
Home value ($)
Down payment (%)
Mortgage rate (%)
Loan term (years)
Appreciation (%/yr)
Closing costs (% of price)
Inspection / appraisal ($)
Initial setup ($)
Value-adding renovations ($)
Ongoing income & costs
Additional income ($/mo)
Property tax (%/yr of value)
Homeowners insurance ($/mo)
HOA dues ($/mo)
PMI rate (%/yr of loan)
Maintenance (%/yr of value)
Owner-only utilities ($/mo)
Taxable asset sales
Taxable asset sales ($)
Tax (%)
Exit costs
Agent commission (% of sale)
Transfer tax (% of sale)
Prep / staging ($)
Tax & deductions
Filing status
Deduction
Federal LTCG (%)
State LTCG (%)
Federal marginal (%)
State marginal (%)
Year-1 itemized advantage
Itemized − standard$19,519
Tax savings$6,500

Itemized total (mortgage interest + property tax up to $10,000 SALT) is $49,519, beating the standard deduction ($30,000) by the delta shown. Tax savings = delta × combined marginal rate. Mortgage interest is highest in year 1 and declines as principal is paid down.

Mortgage P&I$4,045
Property tax$667
Insurance$150
HOA$0
PMI$0
Maintenance$1,000
Utilities$0
Total monthly cost$5,862
Down payment$160,000
Closing costs$24,000
Initial equity$160,000
Equity after 5 yrs$328,309
Sales tax (one-time)$24,000
Monthly net cash flow$4,138
Break-even year
Never
Renting leads for the full 30 years.
Rent net worth · year 30
$5,302,389
Investment portfolio after LTCG.
Buy net worth · year 30
$4,474,577
After selling costs and capital gains tax.

Net worth over time

Renting leads the entire horizon. After 30 years renting leads by $827,813.
Rent net worthBuy net worth
Year-by-year breakdown
YearRent costRent investRent netOwner costPrincipalInterestEquityBuy net
1$36k$316k$82k$71k$7k$41k$191k-$30k
2$37k$424k$168k$71k$8k$41k$224k$45k
3$38k$538k$256k$72k$8k$40k$257k$124k
4$39k$659k$349k$73k$9k$40k$292k$207k
5$41k$787k$445k$73k$9k$39k$328k$293k
6$42k$923k$546k$74k$10k$39k$366k$384k
7$43k$1.1M$651k$75k$11k$38k$405k$479k
8$44k$1.2M$760k$76k$11k$37k$446k$579k
9$46k$1.4M$875k$77k$12k$37k$488k$684k
10$47k$1.6M$995k$77k$13k$36k$533k$793k
11$48k$1.7M$1.1M$78k$14k$35k$578k$908k
12$50k$1.9M$1.3M$79k$15k$34k$626k$1M
13$51k$2.1M$1.4M$80k$16k$33k$676k$1.2M
14$53k$2.4M$1.5M$81k$17k$32k$728k$1.3M
15$54k$2.6M$1.7M$82k$18k$31k$782k$1.4M
16$56k$2.8M$1.8M$83k$19k$30k$838k$1.6M
17$58k$3.1M$2M$84k$20k$28k$897k$1.7M
18$60k$3.4M$2.2M$85k$22k$27k$958k$1.9M
19$61k$3.7M$2.4M$86k$23k$26k$1M$2M
20$63k$4M$2.6M$87k$25k$24k$1.1M$2.2M
21$65k$4.3M$2.8M$88k$26k$22k$1.2M$2.4M
22$67k$4.7M$3M$89k$28k$21k$1.2M$2.6M
23$69k$5.1M$3.2M$91k$30k$19k$1.3M$2.8M
24$71k$5.5M$3.5M$92k$32k$17k$1.4M$3M
25$73k$5.9M$3.8M$93k$34k$15k$1.5M$3.2M
26$75k$6.4M$4M$94k$36k$12k$1.6M$3.4M
27$78k$6.8M$4.3M$96k$39k$10k$1.6M$3.7M
28$80k$7.4M$4.6M$97k$41k$7k$1.7M$3.9M
29$82k$7.9M$5M$99k$44k$5k$1.8M$4.2M
30$85k$8.5M$5.3M$100k$47k$2k$1.9M$4.5M
Sensitivity — break-even year vs. assumption shifts
Assumption-2%-1%Base+1%+2%
Home appreciation(base 3%)—————
Investment return(base 7%)—————
Rent inflation(base 3%)————Yr 24

“—” means buying never overtakes renting within the time horizon under that assumption.