Rent vs. Buy Calculator: The Full Tax Math
I build Excel models for institutional real estate investors. So when I was deciding whether to rent or buy, I built one for myself.
I build Excel models for institutional real estate investors. So when I was deciding whether to rent or buy, I built one for myself.
What most rent vs. buy calculators miss:
- Tax savings from itemizing (mortgage interest + property tax vs. standard deduction)
- Amortization builds equity — it's not a pure expense
- Your down payment has an opportunity cost (it could be earning returns elsewhere)
- Time value of money (NPV)
- Capital gains exclusion on primary residences
The result: With tax savings factored in, buying came out ahead over a 5-year hold.
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