Free · A planning model, not advice
Rent vs Buy Calculator
Owning against renting and investing the difference — with the opportunity cost of the down payment, the capital gains treatment on both sides done properly, and a sensitivity grid instead of one confident number.
Your comparison
- Own at 10 yrs
- $522,382
- Rent at 10 yrs
- $458,133
- Cash to close
- $163,825
- Owning wins
- 11 of 24
The tax runs both ways
A principal residence is exempt from capital gains tax, and that is credited in full to owning. But the renter is not taxed at 43% either — only half a capital gain is taxable, and 30% of the portfolio sits in a TFSA or RRSP where none of it is. Their effective rate is 15.05%.
Taxing the whole gain at the full marginal rate — the usual shortcut — would put the renter at $414,284 instead of $458,133, understating them by $43,848 and widening owning’s apparent lead by the same amount.
Whichever way this comes out, the next question is what you would actually qualify for — which is a different calculation with a different answer. A broker can tell you before you decide anything.
Talk to a brokerNet worth, year by year
Owning is the home’s value less the mortgage and less 5% to sell, with no tax — a principal residence is exempt. Renting is $163,825 invested on day one plus every month renting costs less, after tax on the taxable half of the gain.
How much the answer depends on two guesses
The crossover year rests entirely on home price growth and investment returns, and nobody knows either. This is the whole range.
| Home growth | 3% return | 5% return | 7% return | 8% return |
|---|---|---|---|---|
| 0% | Never | Never | Never | Never |
| 1% | Never | Never | Never | Never |
| 2% | Yr 7 | Never | Never | Never |
| 3% | Yr 4 | Yr 6 | Never | Never |
| 4% | Yr 3 | Yr 4 | Yr 5 | Yr 5 |
| 5% | Yr 2 | Yr 3 | Yr 3 | Yr 3 |
Owning wins 11 of 24. Your own assumptions are highlighted. If your conclusion holds across the whole grid it is worth something; if it flips halfway, the financial case is close and the decision should rest on something else.
What each path costs in month one
- Owning$3,317.50 of mortgage, $433.33 of property tax and $626.54 of maintenance
- $4,377.38
- Renting
- $2,800.00
- Owning costs more byInvested by the renter every month, at your assumed return — this is the opportunity cost
- $1,577.38
What buying costs to get into
- Down payment
- $150,000
- Land transfer tax
- $11,475
- Legal and title insurance
- $2,350
- Total cash at closingExactly what the renter invests instead, on day one — which is the comparison this page exists to make
- $163,825
Where each path stands after 10 years
- Home value
- $1,007,937
- Mortgage still owing
- $435,158
- Owning, after selling costsEquity of $522,382 after 5% to sell. No tax — a principal residence is exempt
- $522,382
- Renting and investing, after taxGains taxed at an effective 15.05% — half a gain is taxable, and 30% of the portfolio is sheltered
- $458,133
- Owning is ahead by
- $64,250
How much the answer depends on the assumptions
- Your own assumptionsNeither is knowable. If your conclusion holds across the grid it is worth something; if it does not, the decision is closer than one number suggests
- 3.0% and 5.0%
- Effective tax on the renter’s gainsYour 43% marginal rate, on the taxable half of a gain, on the 70% that is not sheltered
- 15.05%
What no calculator can weigh
This does not check whether you would qualify. It uses guideline rent increases when a unit resets to market between tenancies. And it puts no number on whether you can paint the walls, whether the tenancy can be ended, or whether you want to be able to leave in a year. Those decide this for most people at least as often as the arithmetic does.
A planning model, not financial or tax advice. Appreciation and investment return are assumptions you choose, not forecasts, and the answer moves a long way across a realistic range of both — which is why the sensitivity grid is here and why no single crossover year should be trusted on its own. Net worth for owning is the home’s value less the mortgage balance less 5% in selling costs, untaxed, since a principal residence is exempt from capital gains tax. Net worth for renting is the cash that buying would have spent at closing, invested from day one, plus the monthly difference whenever renting costs less, taxed on the taxable half of the gain and only on the unsheltered share. Whichever side is cheaper in a given month invests the difference, so an owner accumulates savings too once rent overtakes the cost of owning. The horizon is not capped at the amortization: past payoff the owner carries property tax and maintenance only. Property tax is held flat, which slightly flatters owning. Not included: whether you would qualify, moving costs, rent resetting to market between tenancies, and everything that is not money.
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What this calculator does
It compares owning against renting and investing the difference, on net worth over time rather than on the monthly payment. The buy side tracks the home’s value, the shrinking mortgage and what it would cost to sell. The rent side tracks what the down payment and closing costs would be worth invested instead, plus every month renting turns out cheaper.
That second piece — the opportunity cost of the down payment — is what most comparisons omit, and omitting it tilts the whole thing toward buying. On the figures here the renter starts with $163,825 invested on day one, which is exactly what the buyer spends to close.
The answer is a crossover year, and then immediately a grid showing how much that year moves when the two unknowable assumptions change. The grid is the point. The single year is not.
- Net worth for both paths, year by year, to whatever horizon you choose
- The down payment treated as the investment it would otherwise be
- Capital gains handled properly on both sides — including registered accounts
- The year owning pulls ahead, and a grid showing how fragile that year is
- Month-one cash flow, stated honestly even where it favours renting
Only half a capital gain is taxable
This is the correction that matters most, and it runs against the direction you would expect from a mortgage site. A principal residence is exempt from capital gains tax in Canada — a genuine advantage of owning, and it is credited in full here. But the renter’s portfolio is not taxed at their marginal rate either. Only half a capital gain is taxable at all, so a 43% marginal rate is an effective 21.5%.
And a great deal of a long-horizon portfolio sits inside a TFSA or an RRSP, where none of it is taxed on this basis. With 30% sheltered, the renter’s effective rate on these figures is 15.05% — not 43%.
Applying the full marginal rate to the whole gain, which is what a well-known version of this calculator does, understates the renter by $43,848 at ten years. It widens the gap in favour of buying from $64,250 to $108,098 — 68% wider — and pulls the crossover a year earlier. A calculator written specifically to correct the pro-buying bias in other calculators had introduced a large one of its own.
- A principal residence is capital-gains exempt — credited in full to owning
- Only half a capital gain is taxable, so 43% marginal is 21.5% effective
- Registered accounts shelter more of it again — 15.05% effective at 30% sheltered
- Taxing the whole gain at the full rate understates the renter by $43,848
- That alone widens buying’s apparent lead by 68%
Whichever side is cheaper invests the difference
In the early years owning costs more each month — $4,377 against $2,800 of rent on these figures — and the renter invests that $1,577 gap. Every rent-vs-buy comparison does this, and it is right.
What almost none of them do is the reverse. Rent rises every year and a mortgage payment does not, so eventually owning becomes the cheaper month. On these figures that happens in month 289. From that point the owner has a growing monthly surplus, and crediting only the renter quietly penalises owning across a long horizon.
Here both sides invest on identical terms, at the same assumed return, taxed the same way. Over a thirty-year horizon the owner’s side portfolio reaches $241,094 — money the usual treatment leaves on the table entirely.
- Month one: owning $4,377 against $2,800 of rent
- The renter invests the $1,577 gap, as every comparison does
- Rent rises and the mortgage payment does not — owning is cheaper from month 289
- From then the owner invests the surplus, on the same terms
- Over thirty years that side portfolio reaches $241,094
The years after the mortgage is paid off count
Choose a thirty-year horizon against a twenty-five year amortization and a common shortcut quietly simulates twenty-five years and labels it thirty. The five years cut off are the ones where the mortgage is gone and the owner pays only property tax and maintenance.
Those are the strongest years owning has. Removing them is a bias against buying, which makes it the one place the usual treatment errs in the other direction — and it is no more acceptable for that.
Here the horizon is whatever you choose. Past payoff the mortgage payment simply stops, and the model carries on.
- A 30-year horizon on a 25-year amortization must simulate 30 years
- After payoff the owner carries only property tax and maintenance
- Those are the strongest years for owning, and they are counted
- Truncating at the amortization biases against buying
- Errors that favour renting are no more acceptable than the reverse
Read the grid, not the year
On the default figures owning pulls ahead in year six. That number depends entirely on two things nobody knows: how fast the home appreciates and what the invested savings return.
Across the grid — home growth from 0% to 5%, returns from 3% to 8% — owning wins in 11 of 24 combinations. At 0% or 1% growth it never wins, at any return. At 5% growth it wins by year two or three regardless of return. The entire answer lives inside that range.
If your conclusion survives the whole grid, it is worth something. If it flips halfway across, the honest reading is that the financial case is close and the decision should turn on something else — how long you will really stay, whether you want to be able to leave, whether you want to own the walls.
- Year six on the defaults — but only on those assumptions
- Owning wins 11 of 24 combinations across the grid
- At 0% or 1% home growth it never wins, at any return
- At 5% growth it wins by year two or three, at any return
- A conclusion that holds across the grid is worth far more than one year
A short stay is the most reliable reason buying loses
Land transfer tax, legal fees and title insurance are paid once and never recovered. Selling costs another 5% of whatever the home is worth. On these figures that is $13,825 going in and tens of thousands coming out.
Those costs have to be earned back before owning can be ahead of anything, and they do not care what the market does. Over five years there is very little time to earn them; over twenty-five there is plenty.
This is why buying so often looks worse than expected, and it has nothing to do with house prices. If you are genuinely unsure how long you will stay, that uncertainty is itself an argument for renting, independent of every other number on this page.
- Closing costs are paid once and never recovered
- Selling costs another 5% of the home’s value
- A five-year stay has very little time to earn either back
- This is the most common reason buying loses, and it is not about the market
- Uncertainty about how long you will stay is itself an argument for renting
What this cannot tell you
It does not check whether you would qualify for the mortgage. It assumes you could buy the home in question, which is a separate question with a separate calculator.
It uses guideline rent increases, when a unit resets to market between tenancies — so a renter who moves may face a step change this model does not show. It also leaves out moving costs on both sides, and the possibility that the comparable rental is not genuinely comparable.
And it puts no number on any of the things that actually decide this for most people: whether you can paint the walls, whether the landlord can end the tenancy, whether you want to be able to leave in a year. Those are real and this page is silent on them.
- It does not check whether you would qualify
- Rent between tenancies resets to market, which guideline increases do not capture
- Moving costs on both sides are excluded
- Stability, control and the freedom to leave carry no number here
- Those decide this as often as the arithmetic does
Using your results well
Put in the horizon you actually expect, not the ten-year default. It moves the answer more than almost anything else, and being honest about it is worth more than being optimistic.
Then move both sliders across the grid’s range before trusting any crossover year. And set the sheltered share to something realistic for you — if you have unused TFSA and RRSP room, leaving it at zero tilts the comparison toward buying for no reason.
If it comes out close, treat it as close. A gap of a few tens of thousands over a decade, resting on two guesses about the future, is not a reason to override what you actually want your life to look like.
- Use your real horizon, not the default
- Move both sliders across the grid before trusting one year
- Set the sheltered share honestly — registered room matters here
- Treat a close answer as close
- This is a planning model, not financial or tax advice
Common questions
Is it better to rent or buy in Canada?
It depends on how long you will stay, your local rent-to-price ratio, and two things nobody can know — how fast the home appreciates and what your savings would return. On the default figures here owning pulls ahead in year six, but across a realistic grid of those two assumptions it wins in only 11 of 24 combinations. At 0% or 1% home growth it never wins at any return.
Why does the down payment count as an investment?
Because it is one. If you rent, that money does not vanish — it can be invested and compound. On these figures the renter starts with $163,825 invested on day one, exactly what the buyer spends to close. Leaving that out, which many comparisons do, quietly biases the whole thing toward buying by ignoring what the renter’s cash is actually doing.
How should the renter’s investment gains be taxed?
Not at the full marginal rate, which is the most common error. Only half a capital gain is taxable in Canada, so a 43% marginal rate is an effective 21.5%. And whatever sits in a TFSA or RRSP is not taxed on this basis at all. With 30% sheltered the effective rate here is 15.05%. Using the full 43% understates the renter by $43,848 over ten years and widens buying’s apparent lead by 68%.
Does this calculator assume buying is better?
No, and it is built to be checked. It credits owning the full principal-residence capital gains exemption, and it credits renting the opportunity cost of the down payment, the correct capital gains treatment and registered accounts. It also invests the owner’s surplus once owning becomes the cheaper month, which most comparisons omit. Move the sliders and you can reach either answer honestly.
What home appreciation rate should I use?
There is no right number — Canadian prices have behaved very differently by city and by decade. Rather than picking one and trusting it, read the grid. If your conclusion holds from 0% to 5% growth, it is robust. If it flips somewhere in the middle, the financial case is close and the decision should rest on something more solid than a guess about the next ten years.
Why does a short time horizon favour renting so strongly?
Because land transfer tax, legal fees and title insurance are paid once and never recovered, and selling costs another 5% of the home’s value. Those have to be earned back before owning is ahead of anything, and a five-year stay gives very little time to do it. This is the most common reason buying looks worse than people expect, and it has nothing to do with the housing market.
What does this leave out?
Whether you would qualify for the mortgage, moving costs on either side, and the fact that rent resets to market between tenancies rather than following guideline increases. It also puts no number on stability, control over where you live, or the freedom to leave — which decide this for most people at least as often as the arithmetic does.
Next step
Whichever way it comes out, find out what you could qualify for.
This page compares two paths on the assumption you could take either. Whether you would actually qualify, and for how much, is a different question with a different answer — and worth settling before the comparison means anything. Mortgage Directorylists licensed brokers across Canada — placement is never sold, and an enquiry goes to one broker only.