Rent vs Buy Calculator — Australia
Compare owning a home in Australia (stamp duty, LMI, mortgage, ownership costs, equity after selling) with renting and investing the deposit, year by year, with the break-even year under your assumptions.
| Upfront buying costs (stamp duty NSW + LMI + legal) | — |
|---|---|
| Monthly: mortgage + owner costs vs rent | — |
| Owner: home value at the end | — |
| Owner: equity after selling costs | — |
| Owner: total cash paid out | — |
| Renter: total rent paid | — |
| Renter: invested deposit + saved difference | — |
| Net position: owner vs renter | — |
| Break-even year | — |
In short
Buying a $900,000 Australian home with 20% down at 5.89% costs about $5,390 a month in mortgage and ownership costs against $3,250 rent, plus $37,188 of stamp duty and legal costs upfront; at 4% growth, 3% rent growth and a 5% investment return the owner is ahead by roughly $55,500 after 10 years with break-even in year 7 — and owner-occupied homes are CGT-free.
Who this is for: Renters deciding whether to buy, and buyers testing how long they need to stay for buying to pay off.
Rent or buy in Australia — the honest comparison
Buying wins when the home's growth plus the rent you avoid outpaces the return a renter earns on the deposit and the extra cash they keep each month — after the owner's upfront costs (stamp duty of roughly 4% in NSW, lenders mortgage insurance if the deposit is under 20%, legal fees) and ongoing costs (rates, strata, insurance, maintenance, typically 1–1.5% of value a year). Those upfront costs are why buying usually loses over short horizons and wins over long ones.
The calculator runs both paths year by year: the owner's equity after selling costs against the renter's invested deposit plus any monthly saving, and reports the break-even year. Australian specifics tilt the result: owner-occupied homes are exempt from capital gains tax and from the age-pension assets test, while a renter's investment returns are taxed — the after-tax return you enter should reflect that.
See also: Home Loan Repayment Calculator — Australia.
Assumptions
- Owner: 30-year P&I loan at the rate entered; stamp duty on the NSW 2026–27 scale; LMI from typical bands when the deposit is under 20%; $2,500 legal; ownership costs as a percentage of current value; selling costs on exit.
- Renter: rent grows at the rent-growth rate; the deposit plus upfront costs are invested at the after-tax return, and any yearly saving over the owner is added.
- Comparison = owner equity after selling costs and loan balance vs renter investment balance at the end of each year.
- No tax on the owner (CGT-free main residence); renter return is treated as after tax; no rent-assistance or vacancy effects.
Worked example
Upfront: NSW stamp duty $34,688 + legal $2,500 = $37,188 (no LMI at 80% LVR). Owning costs $4,266 mortgage + $1,125 costs a month against $3,250 rent. After 10 years the home is worth about $1,332,220; equity after 2.5% selling costs and the $600,758 loan balance is about $698,157. The renter's $217,188 invested at 5% plus the yearly saving over the owner grows to about $642,630. Owner ahead by roughly $55,500; break-even in year 7.
Frequently asked questions
Is it cheaper to rent or buy in Australia?
Month to month renting is usually cheaper; over 7–10 years buying usually comes out ahead if prices grow 3–4% a year, because the renter’s investment return is taxed and the owner’s gain is not.
How long do I need to stay for buying to pay off?
Typically 5–8 years to recover stamp duty, LMI and selling costs; shorter if growth is strong, longer in a flat market.
Does the calculator include stamp duty?
Yes, at the NSW 2026–27 scale; Victorian duty is higher and Queensland lower — see the stamp duty calculator and adjust the result.
What about LMI?
Included automatically when the deposit is under 20% of the price, using typical premium bands.
Should I count rent as ‘dead money’?
No — the comparison is total wealth at the end, and a renter who invests the deposit and the monthly difference can keep pace; the result depends on their discipline and returns.
Does negative gearing matter here?
Only for investors; this comparison is for a home you live in, where interest is not deductible and gains are CGT-free.
Does the model count first-home buyer stamp duty exemptions?
No — it uses full NSW duty; a first-home buyer under $800,000 pays none, which improves the buying case. Reduce the upfront figure accordingly.
What growth rate should I use?
Long-run Australian capital-city growth has averaged about 5–7% nominal, but varies widely by decade and suburb; test 2–6%.
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