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Buying vs. Renting

One question that often crosses everyone’s mind is: “Should I buy or rent?”  This is a major decision, and one that should not be made lightly.  When contemplating buying versus renting, one should consider all of the advantages and disadvantages, and think about factors such as finances, lifestyle, future plans, and features in a home that may be of particular importance.

Appreciating the importance of this decision, we’ve put together a list of factors to consider, citing the advantages and disadvantages of buying versus renting. 

Personalizing Your New Home

When purchasing a new home, there are a number of expenses beyond the home purchase itself.  These may include costs for appliances, window coverings, renovations, furniture, closing costs & legal fees, and insurance.  In addition, there are annual fees such as property taxes and insurance to consider.  In the case of condominium ownership, there are usually monthly condo fees, and sometimes special assessments may also occur.  

However, the freedom to personalize and modify a home is one of the reasons why many people opt to purchase rather than rent. Personalization and modification may include painting walls, customizing/renovating rooms, changing flooring, changing the exterior materials or look of a home, or even constructing an addition.

Tax Benefits

Owning a property provides a number of tax benefits, which arise from the ability one has to deduct property taxes and mortgage interest from their income statements — such benefits are not afforded to tenants. Due to these benefits, people can save a great deal of money, which they can then reinvest, leading to lower monthly expenses being incurred. In other words, if one has enough money to buy, they could find themselves saving a great deal of money in the long run.

With that said, a potential downside is the fact that tenants also are not tying down their capital, with people who buy property having less disposable income, since much of their income and capital is paid back into their property. However, owners can potentially later receive a large capital gain if they resell the property. For more in-depth information on this topic, you should consult an accountant. 

Creating Equity

One of the primary benefits of being a property owner is having something to call ‘yours.’  There are, however, a number of financial benefits to owning a home:

The first, and fairly obvious benefit, is that you are not giving your money to someone else by paying rent.  Rather, the money being spent is going towards something that you actually own; equity is being built. Tenants, on the other hand, can pay for years and years, and will still have no ownership claim to the property.  

The second benefit is the potential ability to earn rental income in the future.  If a homeowner decides to move out in the future, they can rent the property out and earn rental income.  

The final benefit is the ability to earn income on the sale of the property.  Although this is never a guarantee, homeowners often have the ability to make a significant profit on the sale of their property.  Like any other investment, there is a risk that the value of the property could decrease.  However, tenants are not afforded this profit opportunity at all.


One advantage of purchasing is the ability to maintain the property with your own personal level of care.  You do not have to depend on a landlord to address issues.  If you decide to purchase a condominium, one of the top advantages is that these buildings typically have a greater consistency of maintenance.  Such buildings are generally maintained on a set schedule, and its boards are governed by condo laws requiring periodic analysis and reporting on the condition of the building and its financial position. A condo owner can be actively involved in the decision making process by voting in annual meetings, participating as an active condo board member, or voicing their concerns to the elected condo board. 

Downsides of Buying

The most significant downside of buying a property is the up-front cost.  To purchase, one will need a significant down payment (usually 5-20%).  For example, if one decides to purchase a property for $300,000, the down payment will be $15,000-60,000.  This does not include closing costs, mortgage applicant fees, legal fees, property insurance, and mortgage insurance (if applicable).  

Advantages of Renting

There are a number of advantages to renting.  Renting is typically cheaper on an up-front basis, as one is not required to make a large down payment.  In addition, the long term financial commitment is simpler, with tenants being able to move out and not worry about selling the property or renting it out.  The legal commitments are also simpler, with tenants signing a lease agreement rather than mortgage documents.  For newcomers, renting allows a person to discover the city and its neighbourhoods, and to decide which neighbourhood he or she would like to call home on a longer term basis.

Downsides of Renting

The biggest downside to renting is lack of equity.  Even as one pays rent over a long period of time, they still do not own the property or even a portion of the property.  If one decides to move, they generally receive nothing in return.  Moreover, rental payments are not tax deductible.

In addition to this, tenants have no control over many factors regarding their living conditions. If a property has features or finishes that are old or of inferior quality, there is little a tenant can do. Sometimes, a landlord will allow a tenant to make customizations to a property, but often the costs are so prohibitively expensive, a tenant will decide not to spend that much on something they don’t own. Things can also be unpleasant, if a tenant has a landlord who is disagreeable and/or does not properly maintain a property. When one enters into a rental arrangement, it is therefore always good advice for someone to consider a landlord carefully, and to have a meeting with them, to get a sense of how the landlord might be in the potential landlord-tenant relationship.

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