Rent vs buy in NYC: a break-even method you can run
updated 2026-11-11
Buying in NYC beats renting only if you stay long enough to earn back closing and selling costs. In our three examples that took 7 years, 19 years, or never.#
Last updated: 2026-11-11. General information, not legal, tax or financial advice. Rates and rules change, so confirm the numbers for your deal with your real estate attorney and lender.#
The short answer#
Compare what each option costs you every year that you never get back. For renting, that is the rent. For owning, it is mortgage interest, maintenance or common charges, property tax, upkeep and the return your cash would have earned elsewhere, minus any appreciation. If owning costs less per year, divide the one-time costs of buying and later selling by that yearly saving: the result is how many years you need to stay to come out ahead. In New York City the one-time costs are large, about 10–11% of the price across both ends in the examples below, so the break-even is measured in years. Every result below depends on its assumptions; none of it predicts prices or rates.#
Is it better to rent or buy in NYC? Compare unrecoverable costs#
The monthly payment is the wrong comparison. Part of a mortgage payment is principal, which you get back as equity when you sell. What matters is the money that is gone.#
Yearly unrecoverable cost of owning = mortgage interest#
- co-op maintenance, or condo common charges + property tax#
- upkeep and insurance#
- opportunity cost (your down payment and closing costs × what that cash would earn invested)#
− expected appreciation (price × yearly rate) − tax benefit, if you itemize#
Yearly unrecoverable cost of renting = rent (plus renter's insurance, which is small enough to leave out here).#
Break-even years = (buyer's closing costs + seller's costs at sale) ÷ (yearly rent − yearly unrecoverable cost of owning)#
If owning costs more per year than renting, there is no break-even under those assumptions: renting stays cheaper however long you stay.#
The buying guide makes the same point in brief. This guide runs the numbers.#
The NYC inputs that make buying expensive#
- Closing costs going in. About 1–2% of the price on a co-op and 3–4% on a condo, more on a new-development condo. The difference is mostly the mortgage recording tax on condo loans and, from $1 million, the mansion tax. The closing costs guide itemizes them.#
- Costs going out. When you sell, you normally pay the NYC transfer tax (1% up to $500,000, 1.425% above), the New York State transfer tax (0.4%, or 0.65% from $3 million), your broker's commission, and your attorney. The transfer tax guide covers the rates.#
- Flip tax. Many co-ops charge the seller a flip tax, commonly 1–3% of the price. Check the building's before you buy; the flip tax guide explains the formulas.#
- Large co-op down payments. Boards that require 20–50% down tie up more cash, which raises the opportunity cost.#
- Tax treatment. Co-op maintenance includes the building's property tax and mortgage interest, and part of it may be deductible. You benefit only if you itemize, so the scenarios below assume no tax benefit. If you itemize, ask your accountant what owning would save you and subtract it.#
Three worked scenarios#
These are examples, not forecasts. Each uses a 6.0% rate, 20% down, a 4% yearly return on cash, 2% yearly appreciation, a 5% seller's broker commission, and no tax benefit. Mortgage interest is year-one rate × loan, a slight overstatement because the balance falls during the year. Selling costs are computed on the purchase price.#
| Assumption | A: co-op 2BR | B: condo 1BR | C: condo 2BR |
|---|---|---|---|
| Price# | $600,000 | $900,000 | $1,400,000 |
| Down payment (20%)# | $120,000 | $180,000 | $280,000 |
| Loan# | $480,000 | $720,000 | $1,120,000 |
| Rent for a comparable apartment# | $3,900/mo | $5,000/mo | $7,000/mo |
| Maintenance or common charges# | $1,100/mo (includes property tax) | $900/mo | $1,300/mo |
| Property tax# | in maintenance | $700/mo | $1,000/mo |
| Upkeep and insurance# | $2,400/yr | $2,700/yr | $4,200/yr |
| Flip tax at sale# | 2% | none | none |
| Buyer's closing costs# | $8,000 | $24,910 | $48,860 |
| Seller's costs at sale# | $55,950 | $64,425 | $98,550 |
Closing costs use the closing costs guide's fee assumptions: $3,000 attorney, $3,000 lender, plus $2,000 co-op fees (A), or mortgage recording tax at 1.925% of the loan, title insurance at 0.45% of the price and $1,000 recording (B and C), plus the 1% mansion tax on C. Seller's costs are 5% commission + 1.425% NYC transfer tax + 0.4% state transfer tax + flip tax + $3,000 attorney.#
| Yearly figures | A | B | C |
|---|---|---|---|
| Mortgage interest (6.0% × loan)# | $28,800 | $43,200 | $67,200 |
| Maintenance or common charges# | $13,200 | $10,800 | $15,600 |
| Property tax# | – | $8,400 | $12,000 |
| Upkeep and insurance# | $2,400 | $2,700 | $4,200 |
| Opportunity cost (4% × down payment + closing costs)# | $5,120 | $8,196 | $13,154 |
| Less appreciation (2% × price)# | −$12,000 | −$18,000 | −$28,000 |
| Unrecoverable cost of owning# | $37,520 | $55,296 | $84,154 |
| Rent# | $46,800 | $60,000 | $84,000 |
| Yearly advantage of owning# | $9,280 | $4,704 | −$154 |
| One-time costs (buy + sell)# | $63,950 | $89,335 | $147,410 |
| Break-even# | 6.9 years | 19.0 years | never |
How A works out: $63,950 ÷ $9,280 = 6.9 years. In C, owning costs $154 a year more than renting before any one-time costs, so renting stays cheaper at these assumptions.#
How sensitive the answer is#
Change one input at a time and the break-even moves a lot:#
| Change | A: co-op | C: condo |
|---|---|---|
| As above# | 6.9 years | never |
| Rate 5.0%# | 4.5 years | 13.3 years |
| Rate 7.0%# | 14.3 years | never |
| Appreciation 0%# | never | never |
| Appreciation 3%# | 4.2 years | 10.6 years |
| Appreciation 4%# | 3.0 years | 5.3 years |
| No flip tax# | 5.6 years | – |
Appreciation dominates because it is applied to the whole price while you only put down 20%. That is also why it is the riskiest input: nobody knows it in advance. Run your numbers at 0% as well as at your hopeful case, and see whether you can live with both.#
Rent vs buy calculator for NYC: do it by hand#
- Find a rental that matches the apartment you would buy: same neighborhood, size and building quality. Annual rent is your benchmark.#
- Get the loan amount and a rate quote from a lender. Multiply them for year-one interest.#
- Add the listing's maintenance, or common charges plus property tax, times 12.#
- Add upkeep and insurance. For an apartment, a few thousand dollars a year is a common working figure; use your own if you know it.#
- Add opportunity cost: (down payment + closing costs) × a return you consider realistic after tax.#
- Subtract appreciation at a rate you can defend, and check the result at 0%.#
- Compare with rent. If owning is cheaper, divide your one-time costs (closing costs + seller's costs) by the yearly difference.#
What this method leaves out#
- Rent and maintenance growth. The snapshot holds both flat. If rent rises faster than maintenance, charges and taxes, buying looks better over time than the snapshot shows; if they rise faster than rent, it looks worse.#
- Falling interest. Each year more of the payment is principal, so the interest cost falls. A year-by-year spreadsheet captures this; the one-year snapshot does not.#
- Assessments and repairs. A co-op or condo assessment can add thousands in a year. Read board minutes before you buy.#
- Leverage cuts both ways. A 2% price drop on a $600,000 apartment is $12,000, a tenth of a $120,000 down payment.#
Should I rent or buy? The things a spreadsheet misses#
- How sure you are about staying. If there is a real chance you leave the city within the break-even period, the numbers favor renting.#
- Flexibility after you move. A condo can usually be rented out if you leave; many co-ops restrict subletting. The co-op vs condo guide compares the rules.#
- Control. Owners can renovate, keep pets the building allows, and cannot be asked to leave at the end of a lease.#
- What you cannot change. Light, street noise and trees stay the same for as long as you own. DwellScore scores these for each listing, so you can weigh them before you commit for years.#
If you are buying for the first time, the first-time buyer guide covers the programs that lower the cash you need up front.#