Assumptions
Loan $800,000 exceeds $750k — interest deduction capped at $750k portion.
After 30 years
Buyer IRR
-0.1%
Net worth: $3,700,046
Renter IRR
+0.5%
Net worth: $4,015,760
Breakeven
Year 6
Buying's IRR overtakes renting
Monthly cost
$10,578
vs. $14,704 rent (yr 30)
Annualized IRR over time
IRR if you liquidated each strategy at the end of that year
Net worth if liquidated
After all taxes, agent fees, and capital gains
Monthly costs by year
Buyer stacked breakdown vs. rent — hover for totals (tax deduction shown as negative offset)
Sensitivity — buyer IRR impact at year 30
Each bar shows how much the buyer's IRR shifts when that input moves ±a fixed amount from your current values. Base buyer IRR: -0.06%. Hover a bar for details.
Rent vs. Buy Calculator
Compare apples-to-apples buying versus renting strategies
This calculator uses IRR — internal rate of return — to evaluate both strategies on equal footing. It accounts for the opportunity cost of not investing your down payment and savings from the option with cheaper monthly costs.
Buy
The buyer puts the down payment and closing costs into a home. Pays mortgage P&I, property tax, insurance, and maintenance each month, partially offset by the federal mortgage interest deduction (capped at $750k per TCJA 2017). At sale, the buyer pays the agent commission and capital gains tax, deducting the first $250k (single) / $500k (married) of gain under IRC §121.
Rent
The renter invests the same down payment and closing costs into an S&P 500 index fund on day one. Pays rent each month, growing at the inputted rent growth rate. At liquidation, the renter pays 15% federal long-term capital gains tax on portfolio gains above cost basis.
Notes
- Whoever pays less invests the difference. If the mortgage is cheaper than rent in a given month, the buyer invests the savings in the S&P 500. If rent is cheaper, the renter invests the difference instead. Both strategies "spend" the same total cash each month.
- Capital gains applies to both renter and buyer. (See above)
- IRR accounts for when money was spent. A dollar paid in year 1 is more expensive than a dollar paid in year 20. The cumulative IRR chart shows the exact year (if any) one strategy permanently pulls ahead.
Results are estimates for educational purposes only, not financial advice. Federal tax rules only — state and local taxes are not modeled. Capital gains taxed at 15% federal long-term rate. Primary residence exclusion: $250k single / $500k married (IRC §121).