Restored edition: original calculators and articles; newly sourced market and directory records. Review calculator assumptions before relying on results. Methodology
SmartRentOrBuy

Calculation Methodology

Restoration corrections — September 2026

The original engine was recovered. The restored version fixes zero-interest mortgages, stops payments when the loan is repaid, preserves leading-zero ZIP codes, and compares equal cash budgets so investment contributions are not counted twice.

Each scenario's net cost equals upfront housing costs + recurring housing costs + invested contributions − ending assets. Contributions equalize the starting capital and yearly budgets. The difference therefore equals the difference in ending wealth. Annual savings are invested at the beginning of each modeled year, an approximation.

Tax calculations remain simplified legacy assumptions: the property-tax deduction uses a $10,000 cap, a $750,000 mortgage-debt limit and your entered standard deduction. These do not constitute a complete 2026 tax model. State tax rate, annual income and inflation fields from legacy share links do not independently affect this model. Results are nominal dollars. Check current IRS deduction guidance and obtain tax advice.

The sale-gain exclusion assumes continuous principal-residence use for at least two modeled years; other eligibility rules and partial exclusions are not modeled. See IRS home-sale guidance.

Market data was re-imported from Zillow Research. The directory uses new public licensing records; original business accounts, ratings and reviews were not recovered. Coverage varies, and a mailing locality does not establish a service area.

Transparency is key. Here is exactly how we calculate the financial outcome of renting versus buying.

1. The Core Comparison

We compare the Total Net Wealth at the end of your specified time horizon.

  • Buyer's Net Wealth: Home Equity (Home Value - Remaining Mortgage) - Selling Costs.
  • Renter's Net Wealth: Investment Portfolio Value (Initial Savings + Monthly Savings compounded annually).

2. Buying Costs

We account for:

  • Upfront: Down payment and closing costs (typically 2-5% of home price).
  • Recurring: Mortgage principal & interest, property taxes, homeowners insurance, HOA fees, and maintenance (typically 1% of home value/year).
  • Selling: Agent commissions and closing costs (typically 6-10% of final home value).

3. Renting Costs & Investments

We assume:

  • Rent: Increases annually by the specified inflation rate.
  • Insurance: Renters insurance is included.
  • Opportunity Cost: The cash you didn't spend on a down payment is invested immediately. Any monthly savings (if renting is cheaper than buying) are also invested monthly.

4. Tax Implications

We calculate the potential tax benefit of buying by comparing the standard deduction against itemized deductions (Mortgage Interest + Property Taxes, capped at $10k SALT limit). If itemizing is greater, the difference multiplied by your marginal tax rate is considered a "saving" for the buyer.