Rent vs. Own: What's The Best Option For You
Should You Rent or Own? A Real-World Breakdown on a $1M Home
Presented by Real Estate Novo
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The question of whether to rent or buy isn’t just philosophical—it’s financial. For anyone considering a $1,000,000 home, the stakes are real and the math matters. Let’s break it down with actual numbers, tax implications, and long-term outcomes so you can make the decision that’s right for you.
Monthly Cost Comparison:
Let’s say you’re eyeing a $1,000,000 home.
If You Buy:
- Down Payment (20%): $200,000
- Loan Amount: $800,000
- Interest Rate: 6.5% (30-year fixed)
- Monthly Principal & Interest: ~$5,056
- Property Taxes (1.25%): ~$1,042/month
- Homeowners Insurance: ~$100/month
- Maintenance Budget (1% annually): ~$833/month
Total Monthly Cost (before tax benefits): ~$7,031
If You Rent a Comparable Home:
- Rent: ~$4,500/month
- Renters Insurance: ~$20/month
Total Monthly Rent Cost: ~$4,520
Surface-Level Comparison:
Renting
appears to be ~$2,500/month cheaper—but that’s before factoring in
tax savings, equity build-up, and appreciation.
Tax Benefits of Homeownership:
Mortgage interest and property taxes are often tax-deductible if you itemize your deductions (subject to IRS limits and qualifications).
Estimated First-Year Deductions:
- Mortgage Interest (Year 1): ~$51,000
- Property Taxes: ~$12,500
- Total Deductible Expenses: ~$63,500
If you're in a 35% combined federal and state tax bracket, that could result in tax savings of ~$22,225/year, or about $1,850/month.
Adjusted Monthly Cost (after tax benefits):
$7,031 - $1,850 = $5,181/month
👉🏼 Now the cost of buying is much closer to renting.
Equity Accumulation
Your monthly mortgage payment builds ownership, not just covers housing.
- Year 1 Loan Paydown (Principal): ~$13,000
- Estimated Home Appreciation (3%/year): ~$159,000 after 5 years
- Loan Paydown After 5 Years: ~$75,000
Total Equity After 5 Years: ~$234,000
Compare that to renting for 5 years at $4,500/month with 3% annual increases: you'd spend over $290,000 in rent, with no ownership to show for it.
Flexibility vs. Responsibility
Renting Offers:
- Greater mobility
- Lower upfront costs
- No maintenance concerns
- But: rising rents, no equity, and no tax savings
Buying Offers:
- Long-term wealth building
- Stability and control
- Potential tax benefits
- But: higher upfront investment, market exposure, and ongoing responsibility
💭 Final Thought from Real Estate Novo
The best decision depends on your goals, lifestyle, and time horizon. But when you factor in tax benefits, equity, and appreciation, buying can often outpace renting in the long run—even when the monthly cost seems higher at first.
At Real Estate Novo, we’re here to help you explore your options with clarity and confidence. Whether you're a first-time buyer, long-time renter, or simply curious about the numbers—we’ll walk through the scenarios and guide you toward the right fit for your future.
Let’s connect. Reach out anytime for a one-on-one conversation.
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📩 Get in touch with us today about our upcoming exclusive rent vs. own seminar!
Disclaimer: Real Estate Novo does not provide tax or legal advice. The figures and scenarios presented in this article are estimates for informational purposes only. Tax deductions and mortgage terms vary based on individual circumstances. Before making any purchase decision, please consult your tax advisor and mortgage lender to confirm what applies to your specific situation.
