Buy vs Rent Calculator
May 23, 2025
The Buy vs Rent Decision
Understanding the key factors that determine whether buying or renting is right for you
Beyond Monthly Payments
The buy vs rent decision isn't just about comparing monthly mortgage payments to rent. It's about understanding the complete financial picture: tax benefits, opportunity costs, maintenance responsibilities, and long-term wealth building potential. This calculator helps you model all these factors to make an informed decision based on your specific situation.
Key Factors to Consider
- Tax Benefits: Mortgage interest and property tax deductions can significantly reduce the effective cost of homeownership
- Opportunity Cost: The down payment and monthly savings from renting could be invested in the stock market
- Home Appreciation: Real estate typically appreciates over time, building equity for homeowners
- Maintenance and Repairs: Homeowners are responsible for all maintenance costs and unexpected repairs
- Transaction Costs: Buying and selling homes involves significant costs (closing costs, realtor fees, etc.)
- Flexibility: Renting offers more flexibility to relocate for career opportunities or life changes
2025 SALT Deduction Cap Increase
Starting with the 2025 tax year, the State and Local Tax (SALT) deduction cap has increased from $10,000 to $40,000 for most taxpayers. This change significantly improves the tax benefits of homeownership, especially for residents in higher-tax states. The SALT deduction combines both state income taxes and property taxes, and the increased limit means more homeowners can deduct both their state income tax and property tax payments.
Impact on Homeowners
This change is particularly beneficial for homeowners in states with higher state income taxes and property taxes. Previously, many homeowners found their state income taxes alone consumed most or all of the $10,000 SALT deduction limit. With the new $40,000 limit, there's now substantial room to deduct both state income taxes and property taxes, making homeownership more tax-advantaged.
California Residents: Use Our Specialized Calculator
California has unique housing market protections that significantly impact the buy vs rent decision. Proposition 13 caps property tax increases at 2% per year (regardless of home appreciation), while AB 1482 and local rent control laws limit annual rent increases. These protections fundamentally alter the financial comparison.
Calculator Inputs
Adjust the values below to match your specific situation
Time Horizon
Results: Buy vs. Rent
Based on your inputs over a 10 year period
Buying a Home
Renting
Recommendation
30-Year Financial Comparison
This interactive chart shows the projected net financial position over 30 years for both buying and renting scenarios. Hover over data points to see detailed values. The comparison is based on your specific inputs and current financial conditions.
Newsletter Sign Up
Want more calculator tools? Subscribe to our newsletter for updates!