Buy vs rent 2026: 7-country comparison of break-even year and 10-year net worth

Why country matters for the buy vs rent decision

The classic US rent vs buy calculator (the NYT's flagship version) was built for one country's tax and transaction-cost regime. It assumes federal mortgage interest deduction, 5 percent selling cost, and no acquisition stamp duty. When you apply the same model to the UK or Singapore, it badly mis-states the math.

Three country-specific levers swing the result by years of break-even:

1. Transaction cost on entry. US 2 to 5 percent (state-dependent transfer tax + closing). UK SDLT up to 12 percent above 1.5M plus 2 percent non-resident surcharge. India 7 percent stamp duty + 1 percent registration. Singapore BSD + ABSD up to 60 percent for foreigners. UAE 4 percent Dubai Land Department fee.
2. Mortgage interest deduction. US: deductible to 750,000 USD loan cap, IRS Pub 936. India: Section 24(b) up to Rs 2,00,000 per year on self-occupied (old regime). UK, Canada, Australia, UAE, Singapore: no deduction on owner-occupied. UK buy-to-let gets a 20 percent basic-rate credit only.
3. Property tax + ongoing levies. US 1.1 percent. UK council tax banded (rough 0.5 to 1 percent effective). Canada 1 percent (varies by municipality). Australia 0.4 to 1 percent land tax. India 0.5 percent. UAE 0 percent. Singapore 0.8 percent. Annual tax matters more than buyers realise: 1 percent of a 750K home is 7,500 USD per year, or 75,000 over 10 years.

The math: in the US the 750K mortgage interest deduction at a 24 percent marginal rate effectively subsidises 1.7 percent of the loan rate, lowering the cost-of-buy curve. In the UK that subsidy is zero, and a 5 to 10 percent SDLT band has to amortise over a longer horizon to make sense. The result: same property, same rent, very different verdict.

This piece runs the same 10-year scenario through seven countries side-by-side and ranks them by break-even year. Use the 3Tej Buy vs Rent Decision Calculator to drop in your own numbers.

The 10-year scenario we modelled

To make countries comparable we held the underlying lifestyle constant and only swapped tax/cost assumptions:

• Home price: 750,000 USD-equivalent in local currency.
• Comparable monthly rent: 3,000 USD-equivalent (gross rental yield 4.8 percent).
• Down payment: 20 percent. Loan: 600,000 USD.
• Mortgage tenure: 25 years.
• Mortgage rate: country default (US 6.5%, UK 4.5%, Canada 5.0%, Australia 6.2%, India 8.5%, UAE 4.5%, Singapore 3.5%).
• Home appreciation: 3 percent per year (long-run real average across OECD).
• Stock real return: 7 percent (S&P 500 long-run, Damodaran NYU).
• Rent inflation: 3 percent per year.
• Maintenance: 1 percent of home value per year.
• Insurance: 0.2 to 0.3 percent of home value per year.
• Marginal income tax: country default (24% US, 40% UK, 33% Canada, 37% AU, 30% India, 0% UAE, 22% Singapore).
• Horizon: 10 years.

On the rent + invest side, we invest the down payment + half the round-trip transaction cost (the buy-side closing costs) on day 1 at the stock real return. Each year, if the all-in cost of ownership exceeds rent, the difference is also invested. Rent grows at 3 percent per year.

The buy-side net worth at horizon is: home value after appreciation - selling cost - remaining mortgage balance - cumulative out-of-pocket ownership costs (P&I + property tax + maintenance + insurance - mortgage interest deduction).

The rent-side net worth at horizon is: invested portfolio - cumulative rent paid.

Break-even year is the smallest t where buy net worth meets or exceeds rent + invest net worth. Below the break-even, rent wins; above it, buy wins.

7-country comparison table: break-even year and 10-year net worth

For the same 750,000 USD-equivalent home, 3,000 USD-equivalent rent, 10-year horizon, country-default rates and tax. Net worth at horizon means home equity after selling cost minus mortgage balance minus cumulative ownership cost (buy) versus invested portfolio minus cumulative rent (rent + invest). Positive advantage means buy wins.

Three patterns jump out:

1. The UAE wins not because Dubai property appreciates faster but because 0 percent property tax and a relatively low 4 percent DLD fee mean the ongoing cost of ownership stays low while the down payment slowly underperforms equities. Buy still wins at year 5 because rent is fully an expense, not wealth.
2. India wins on the strength of Section 24(b). At a 30 percent marginal rate the Rs 2L interest deduction plus the Rs 1.5L 80C principal credit add up to Rs 1,05,000 (roughly 1,260 USD-equivalent) per year of tax saving, which materially lowers the effective mortgage rate.
3. The UK result is striking: even with a low 4.5 percent mortgage rate, the 5 to 10 percent SDLT + selling round-trip prevents buy from clearly winning at the 10-year mark. With the 2 percent non-resident surcharge, rent dominates by year 10. The same dynamic kills Singapore for foreign buyers, where ABSD alone is 60 percent.

The opportunity cost of the down payment is the dominant variable

Most buy-vs-rent debates get tangled in mortgage rate and property tax. The math says those are second-order. The first-order driver is what the down payment plus closing costs would earn if invested instead.

Worked example for the US scenario: 750,000 home, 20 percent down = 150,000 USD. Add purchase closing of 3.5 percent of price = 26,250 USD. Total day-one cash: 176,250 USD.

Compounded at 7 percent real over 10 years: 176,250 x 1.07^10 = 346,742 USD. That is what the renter has on paper at year 10 if they invest the same lump sum in a global equity index.

Now the buyer at year 10 has:

• Home value: 750,000 x 1.03^10 = 1,007,924 USD.
• Mortgage balance after 10 of 25 years at 6.5%: roughly 425,000 USD remaining on the original 600,000 loan.
• Selling cost on exit (3.5%): 35,277 USD.
• Equity: 1,007,924 - 425,000 - 35,277 = 547,647 USD.
• Less cumulative net cost of ownership over 10 years (P&I 485K + property tax 88K + maintenance 80K + insurance 22K - mortgage interest deduction credit 35K = 640,000 USD): subtract from above. Net: 547,647 - 640,000 = -92,353 USD.

Wait, this looks like buy loses. The trick: rent + invest also has cumulative rent. Cumulative rent over 10 years at 3,000 per month inflating 3 percent annually = roughly 412,000 USD. Subtract from invested portfolio: 346,742 - 412,000 = -65,258 USD.

So in net terms: buy ends at -92,353; rent ends at -65,258. Rent wins the 10-year comparison by 27,000 USD on these inputs.

If we extend the horizon to 12 years, the buy mortgage balance drops further and home appreciation compounds, while rent inflation has compounded another 6 percent. Buy crosses ahead around year 7 to 8 in our model because the marginal year of ownership adds about 18,000 USD of equity (principal paid + appreciation - net cost) while the rent path adds only about 12,000 USD (portfolio growth - rent paid). The crossover is the break-even year.

This explains why mortgage rate matters less than people think. Going from 6.5 to 5.5 percent saves about 5,000 USD a year of interest, which is real but smaller than the 12,000+ USD year-over-year gap that opens up around break-even.

When buy wins, when rent wins (decision framework)

Boil it down to a country-aware checklist.

Buy is the right call when

• Holding horizon is 7+ years.
• Round-trip transaction cost is under 8 percent.
• You qualify for the mortgage interest deduction (US under 750K loan cap, or India old regime Section 24(b)) AND your marginal tax rate is high enough for the deduction to matter (24%+).
• Home appreciation in your area is at least 3 percent and tracks the equity opportunity cost.
• You will use the property as a primary residence (capital gains exclusion or PRR on sale).
• You have a stable income that makes the 25-year amortisation realistic.
• You have an emergency cushion separate from the down payment (3 to 6 months of expenses).

Rent + invest is the right call when

• Holding horizon is under 5 years (the 5-year rule).
• You live in a high-stamp-duty country (UK, Singapore for foreigners, India for non-state-discounted buyers).
• Stock real returns clearly outpace local property appreciation (most developed markets in 2024-2025).
• You will move for career, family, or lifestyle reasons within the horizon.
• The country offers no owner-occupied mortgage interest deduction (UK, Canada, Australia, UAE, Singapore).
• You are a foreign buyer subject to non-resident surcharge (UK 2 percent, Singapore 60 percent ABSD, BC 20 percent, Ontario 25 percent, NSW 8 percent).
• You value flexibility and can discipline yourself to actually invest the difference.

The single biggest mistake in either direction is not modelling the actual horizon. Most buyers overestimate how long they will stay; most renters underestimate the discipline cost of investing the difference.

Country-by-country detail

United States. At 6.5 percent mortgage rate the math is tight but workable. The deduction up to the 750K loan cap shaves 1.5 to 2 years off break-even at a 24 percent marginal rate. Property tax varies by state (NJ, IL, TX are 2 percent+; CA, AL are under 1 percent). The 500,000 USD couple capital gains exclusion on primary residence sale is a real tail-end advantage not captured in the 10-year horizon. FIRE planners in the US often combine the deduction with a strategy of holding for at least 7 years to amortise transaction cost.

United Kingdom. The killer in the UK is tiered SDLT plus the 2 percent non-resident surcharge plus no mortgage interest deduction on owner-occupied. At a 750K-pound home, SDLT is roughly 25,000 pounds, with an additional 2 percent (15,000) if you are a non-resident. UK SDLT 2026 guide and UK SDLT non-resident cover the bands. Council tax adds 1,500 to 3,000 pounds per year. The 5-year rule is very tight in the UK; under 7 years rent usually wins.

Canada. No owner-occupied mortgage interest deduction, but the primary-residence capital gains exemption is unlimited (one of the most generous in the developed world). At a 1 percent property tax + 5 percent selling cost + Land Transfer Tax (or PTT in BC), Canada's break-even is around year 7 to 8. Toronto, Vancouver foreign buyer tax adds 20 to 25 percent for non-residents and effectively rules out buying at the 10-year mark.

Australia. 5 to 6 percent stamp duty plus 0.4 to 1 percent annual land tax plus 2 to 3 percent selling cost equals a round-trip of 8 to 10 percent. The Capital Gains Tax main residence exemption helps on exit. No deduction on owner-occupied. First-home buyer concessions (varying by state) can drop stamp duty to zero under a threshold, materially shortening break-even. The new FHSS scheme further helps deposit accumulation. NSW charges an 8 percent foreign-buyer surcharge.

India. Old regime Section 24(b) deduction up to Rs 2,00,000 plus 80C principal up to Rs 1,50,000 is the strongest owner-occupied subsidy of any country in our comparison after the US. At a 30 percent marginal rate this saves roughly Rs 1,05,000 per year, or about 6 percent of an average EMI. New regime borrowers do not get Section 24(b) on self-occupied, which moves break-even out by 1 to 2 years. Stamp duty is 5 to 7 percent depending on state; women buyers in many states get a 1 to 2 percent discount.

UAE (Dubai). Cleanest math of any country. 0 percent personal income tax means no deduction needed. 4 percent Dubai Land Department fee + 2 percent agent = 6 percent round-trip. 0 percent property tax. The trade-off is currency risk if you earn in AED and plan to retire elsewhere, plus visa/residency-tied ownership rules for non-citizens.

Singapore. The most punishing for foreigners: ABSD is 60 percent of the purchase price for non-resident buyers. Even citizens pay ABSD on second and subsequent properties (20 to 30 percent). BSD adds 1 to 6 percent. Selling cost 2 to 3 percent. For citizens buying their first HDB or private, the math can work past year 7 to 8, but for foreigners the round-trip is so heavy that rent dominates indefinitely.

Risks and caveats

Five things the calculator does not model that you should think about separately:

1. Forced saving discipline. If you are unlikely to actually invest the rent surplus, buying is your real savings vehicle. Behavioural reality often beats theoretical math.
2. Local price-to-rent ratios. If your city's price-to-rent is over 25 (NYC, London, Sydney), buy economics get harder. Under 15 (much of US Sunbelt, India tier-2 cities), buy economics improve dramatically.
3. Capital gains tax on the eventual sale. US 500K couple exclusion, UK Private Residence Relief, Canada primary residence exemption, India indexation. These tail-end taxes can materially help or hurt depending on country.
4. Mortgage rate volatility. The model assumes a fixed rate. In the UK and Australia, 2 to 5 year fixed periods reset to market rates, which can swing payments by 30 percent.
5. Currency risk for cross-border buyers. Earning USD and buying in GBP carries 10 to 30 percent multi-year swings. A 10-year hold can produce wildly different returns in your reporting currency.