Rent vs buy: buy, or rent and invest the difference?
Both paths compound month by month — the buyer builds equity, the renter invests the deposit and any spare cash1. Here’s who’s ahead, and when it flips.
- 1 Both investment pots compound at the same return, so it’s an apples-to-apples wealth comparison. Highly sensitive to the growth assumptions. Estimate only.
How this calculator works
It runs both lives month by month. The buyer puts the deposit and upfront costs into the home, pays the mortgage and ownership costs, and finishes with the home's equity after selling costs. The renter invests that same deposit and, each month, invests whatever they save versus the owner's costs, compounding at your assumed return. The one with more net worth at the end wins. Buying usually needs time to overcome the big upfront costs; the break-even year shows when it pulls ahead.
What it doesn't model
It keeps returns and capital gains untaxed for simplicity. In reality your owner-occupied home is exempt from capital gains tax while investment returns are taxed, so the true picture leans a little more towards buying than the numbers show. It also can't price the things that aren't money: security and freedom to renovate on one side, flexibility and less maintenance on the other.
Common questions
How many years until buying beats renting?+
Often around 7–10 years, because stamp duty and buying costs take time to earn back, but it depends entirely on your growth and return assumptions. The break-even year updates as you change them.
Does it include stamp duty?+
Yes, inside the upfront buying costs (default 5.5% of price). For an exact figure by state use the stamp duty calculator and enter it here.
Should I rent or buy?+
That's a personal call this tool can't make for you. It shows the money side so you can weigh it against the lifestyle side. It's general information, not financial advice.