Rent or buy? Home purchase vs renting comparison

Example: for a 150,000 € home with a 20% down payment, 4% interest and 700 € rent, the owner’s monthly cost at the start is 673 € and buying becomes better than renting in year 2 (price growth, rent growth and return as examples of 3%, 3% and 5%).

The calculator answers the question: is it better to buy a home with a mortgage or rent and invest the money that would otherwise go into the down payment? It compares who has more money and assets at the end of the chosen period.

How to read the result?

You pay per month – the buyer pays the loan and the owner’s costs, the renter pays rent. Whoever pays less sets the difference aside.
Needed upfront – the down payment plus notary fee and state fee (with the same formulas as the notary fee calculator). The renter does not buy but invests this amount.
After N years – the buyer has the home’s value minus the loan balance and selling costs (plus their savings), the renter has investments with returns.
How certain is it – the line “buying wins if the home price changes at least …” shows the threshold. If your assumption is above it, buying wins; if below, renting. The further the threshold is from your assumption, the more certain the answer.

Taxes: in Estonia, the gain from selling a home used as your residence is exempt from income tax (Income Tax Act § 15(5)(1), once every two years). Mortgage interest can no longer be deducted from 2024 income. By default, 22% income tax is deducted from the renter’s savings gains on withdrawal.

The assumptions are examples: home price growth, rent growth (default 3%) and the return on savings (5%) are not forecasts – change them under “I’ll set them”. The calculator does not include interest rate changes (Euribor), major renovations or quality of life (security, moving) – weigh these separately.

Frequently asked questions

Is it better to rent or buy a home?

It mainly depends on three things: how fast the home price grows, how high the rent is compared to the purchase price, and what return the down payment money would earn if invested. Over short periods renting often wins (purchase and selling costs do not pay back), over long periods buying often does. The calculator shows the home price growth at which both paths are equal.

Is income tax due when selling a home in Estonia?

No, if you sell a dwelling you used as your residence until the sale – the gain is exempt from income tax (Income Tax Act § 15(5)(1)). The exemption can be used once every two years. The gain on an apartment that was rented out or bought as an investment is taxed at 22%.

Sources

Based on official sources · last reviewed 2026-11-06.