Compare Renting & investing vs Buying & building equity
Deciding whether to rent or buy is one of the most important financial decisions you'll make — and yet many existing calculators fail to model the calculation accurately. Rentvsbuybc.ca was built to answer the question of whether renting or buying leads to greater wealth in the long term in British Columbia. It uses an apples-to-apples model: whichever path is cheaper in a given year automatically invests the leftover cash, prioritizing your tax-free (FHSA and TFSA) accounts first.
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| Year | Renting net worth | Buying net worth | Annual rent − buy cashflow |
|---|
1) The Golden Rule (Apples-to-Apples): To make
a fair comparison, the calculator assumes the Renter
and the Buyer start with the exact same amount of cash
and spend the exact same amount each month.
• Upfront Cash: The Renter takes the money the
Buyer would have used for a down payment and closing
costs, and puts it into investments.
• Monthly Cashflow: Every year, the calculator
compares the total cost of renting (rent + tenant
insurance) against the total unrecoverable cost of
owning (mortgage, property tax, strata, maintenance,
etc.). Whoever has the cheaper housing costs that year
takes the extra cash and invests it.
2) Investment Accounts (Where the money grows):
When investing extra cash, the calculator prioritizes
your tax-free accounts first.
• Renter: Fills available FHSA room, then TFSA,
then puts the rest into a regular taxable investment
account.
• Buyer: Fills available TFSA room, then puts
the rest into a regular taxable investment account.
3) Taxes on Investments: TFSA and FHSA accounts grow completely tax-free. For regular taxable accounts, the calculator assumes you receive a small payout each year (the "Taxable yield", like stock dividends) which is taxed immediately at your marginal rate. The rest of the growth is considered a "capital gain" and is only taxed at the very end of your timeline when you cash out.
4) Your Existing Savings: If you plan to use money already sitting in an RRSP (Home Buyers' Plan), FHSA, or TFSA for your down payment, the "Renting" scenario simply leaves that money in those tax-sheltered accounts so it can continue to grow.
5) Home Value & Selling: Your home's value grows each year completely tax-free (assuming it's your primary residence). However, the final "Buying net worth" assumes you sell the home at the end of the timeline, meaning real estate commissions and legal fees are subtracted from your final equity to give a true "cash in hand" comparison.
6) B.C. Taxes & Grants: We automatically calculate B.C.'s Property Transfer Tax (PTT) based on current rules, including partial and full exemptions for First-Time Buyers and New Builds. We also automatically deduct your chosen B.C. Basic Home Owner Grant from your annual property taxes.
7) What this doesn't include: This is a long-term planning tool, so it simplifies a few things. It does not account for moving costs, major one-off renovations, special strata levies, changes in mortgage rates over time, refinancing, mandatory RRSP Home Buyers' Plan repayments, or the specific income tax refunds you get when contributing new money to an RRSP or FHSA.