How to use the rent vs buy calculator
Enter the property price you are considering, your state (so the calculator can apply the correct stamp duty), and your deposit percentage. Then enter the weekly rent for a comparable property, your assumed annual property growth rate, and what you believe you could earn investing the deposit instead.
The calculator shows your net wealth at the end of the comparison period for each path, the break-even year when buying first overtakes renting in net wealth terms, and a year-by-year table you can step through.
The real cost of buying a home in Australia
Most Australians focus on the mortgage repayment when comparing renting and buying. But the true annual cost of owning a home is significantly higher:
- Mortgage repayments — principal and interest on your loan
- Stamp duty — a large one-off tax paid at settlement (up to $36,000 on a $900k Sydney property)
- Council rates — typically $1,500–$3,500 per year depending on state and property value
- Building and contents insurance — typically $1,200–$2,000 per year
- Maintenance and repairs — most financial planners budget 1% of property value per year
- Strata levies (apartments) — often $3,000–$8,000+ per year in Sydney and Melbourne
- Selling costs — agent commission (~2–2.5%) plus legal fees when you eventually sell
The calculator accounts for all of these. Renting also has a hidden cost: every year you rent, your upfront deposit is sitting in an investment account — earning money for you. The question is whether that investment return beats the capital gain on the property.
Why stamp duty changes everything
Stamp duty is a state government tax paid when you buy a property. It is one of the biggest reasons buying takes years to overtake renting in financial terms. On a $900,000 property in NSW, stamp duty is approximately $36,000 — an immediate 4% loss before you even move in.
First home buyers receive concessions in most states. In NSW, established homes under $650,000 are fully exempt; partial concessions apply up to $800,000. In Victoria, homes under $600,000 qualify for full exemption. The calculator applies these concessions automatically when you select first home buyer status.
The ACT has moved to a land tax model and is phasing out stamp duty entirely. If you are comparing options in the ACT, the stamp duty cost is substantially lower than other states, which improves the buying case.
What the renter does with their savings
The renting path in this calculator assumes the renter invests the full amount that a buyer would spend upfront — the deposit, stamp duty, and legal costs. This is the opportunity cost the buyer sacrifices by purchasing.
Each year, if the cost of owning (mortgage + rates + insurance + maintenance) is higher than the cost of renting, the renter saves that difference and adds it to their investment portfolio. If renting becomes more expensive than owning (common in later years as rent rises but the mortgage stays fixed), the renter draws from their portfolio to make up the gap.
Set the investment return to reflect your expected returns. Australian broad-market ETFs have historically delivered 7–10% per year before tax. A conservative estimate of 7% is the default.
Capital gains tax — the tax advantage of owning your home
This calculator does not apply CGT to either path. In reality, your principal place of residence (PPOR) is fully exempt from capital gains tax when you sell. The investment portfolio in the renting scenario is not CGT-exempt — gains would be taxed, with a 50% discount for assets held over 12 months.
This means the calculator is conservative for buying — the real financial advantage of owning your home is somewhat better than shown, because the renter's investment gains would face tax that the buyer's capital gain does not.
Frequently asked questions
Is it better to rent or buy in Australia in 2026?
It depends on your city, time horizon and property growth assumptions. At current interest rates (~6.5%) and property prices, buying typically breaks even with renting after 7–12 years in most capital cities. If you plan to stay in the same home for 10+ years, buying generally builds more wealth due to capital gains. If you might move in under 5 years, renting and investing is often the stronger financial choice because stamp duty and transaction costs are front-loaded.
How does the rent vs buy calculator work?
The calculator runs a year-by-year simulation of two paths. In the buying path, you spend your deposit + stamp duty + legal costs upfront, then pay mortgage repayments, council rates, insurance and maintenance each year. Your net wealth is the property's value minus your remaining mortgage and selling costs. In the renting path, you invest the same upfront cash and add or subtract the annual cost difference between buying and renting. Your net wealth is the investment portfolio. The break-even year is when buying's net wealth first exceeds renting's.
What is the typical stamp duty on a $900,000 property in NSW?
For a $900,000 established home in NSW in 2026, stamp duty is approximately $36,000. First home buyers purchasing a home under $800,000 pay no stamp duty — between $800,000 and $1,000,000 a partial concession applies. The calculator automatically applies first home buyer concessions when you tick the FHB box.
What return should I use for the investment portfolio?
The Australian share market (ASX 200) has delivered approximately 7–10% per year over the long run including dividends. After fees and before tax, 7% is a conservative benchmark. Broad diversified ETFs tracking the ASX or global markets have historically delivered returns in this range. Remember that past performance does not guarantee future results.
How much does it cost to own a home in Australia each year beyond the mortgage?
Beyond your mortgage repayments, typical ongoing costs for an Australian home include: council rates ($1,500–$3,500/year depending on state and property value), building and contents insurance ($1,200–$2,000/year), and maintenance (typically budgeted at 1–2% of the property's value per year). Strata levies apply to apartments (often $3,000–$8,000/year for typical Sydney or Melbourne units). The calculator includes council rates, insurance and maintenance — add strata fees to your insurance field if applicable.
What property growth rate should I use for Australia?
Australian residential property has grown at approximately 5–7% per year over the past 30 years on a national basis, though this masks huge variation: Sydney averaged about 8% over three decades while some regional markets underperformed. For a conservative base case, 5% is reasonable. For major capital city inner suburbs, 6–7% reflects long-run averages. Be cautious of using recent peak growth rates — periods like 2020–2022 (where some markets grew 20%+ in a year) are not sustainable over the long term.
Does the calculator account for capital gains tax?
No — CGT is not applied to either path to keep the comparison straightforward. In practice, your principal place of residence is exempt from CGT when you sell, giving buying a significant tax advantage the calculator does not capture. Investment portfolios (the renting path) are subject to CGT on gains, which would reduce the renter's net wealth — further favouring the buying path in the long run. Consider this a conservative estimate for buying.
When does buying a home start to make financial sense?
In most Australian capital cities with current interest rates, buying starts to make financial sense after roughly 7–12 years, once capital growth has overcome the large upfront transaction costs (stamp duty, legal costs, and mortgage interest in the early years). The exact break-even point depends on the local rental market, property growth rate, your deposit size, and the rate you can earn on investments. Use the calculator to enter your specific numbers and find your personal break-even year.