Buy vs Rent
Using your real income and taxes, here's how buying compares to renting over 30 years - and which builds more wealth.
Over 30 years, in nominal dollars
Buying comes out ahead
by $1.4M · buying overtakes renting around 2027
Net worth: buy vs rent
Home equity + investments if you buy, vs investing the difference if you rent · nominal · crossover 2027
Monthly cost: own vs rent
Net owning cost (after tax benefit) vs rent, in nominal dollars.
Mortgage-interest deduction
The interest you can write off (with property tax, capped by the SALT limit) when itemizing beats the standard deduction - scored against your real federal + state brackets.
Deductible interest is capped to interest on the first $750,000 of mortgage principal (Single owner). This saving is already folded into the net monthly owning cost above.
What's driving this
- California's Prop 13 caps your property-tax growth at 2% a year while rent keeps climbing.
- A fixed mortgage payment stops rising; rent compounds every year.
- Mortgage-interest and property-tax deductions plus the capital-gains exclusion boost owning.
- Owning pulls ahead around 2027, after the upfront cost is absorbed.
- Heads up: buying squeezes your savings (down to "brokerage") in some years - the affordability flag shows the strain.
- Even renting trims your savings in lean years at this income and spending level.
- Ownership structure: Single owner.
Educational estimate using 2026 federal + California state income tax, inflated annually. Models the OBBB SALT-cap schedule, mortgage-interest deductibility, the §121 exclusion, and your state's property-tax and capital-gains rules. No PMI or transfer-tax nuances. Excludes local/city income taxes, state credits, and the 3.8% Net Investment Income Tax. Returns are nominal. Not financial, tax, or investment advice.
Income, filing, returns, and contributions come from your main plan.