Rent vs. Own: an honest wealth comparison

The renter invests the down payment. The single biggest driver of the renting outcome is the lump sum — down payment plus closing costs — invested on day one. Calculators that skip it aren’t comparisons; they’re pitches.

Investing runs both ways. Rent rises; a fixed mortgage payment doesn’t. Early on, the renter usually invests the monthly savings. Later, when rent overtakes the cost of owning, the owner invests the difference. Most calculators only let one side save. This one doesn’t pick a side.

The tax deduction is the marginal benefit, not the whole thing. Mortgage interest only helps to the extent your itemized deductions exceed the standard deduction. For many buyers at typical Clark County price points, that benefit is smaller than advertised — sometimes zero. The model also caps deductible interest at $750K of loan and applies the SALT cap (Washington has no income tax, so SALT here means property tax plus the sales tax deduction).

The exit is taxed honestly — in both directions. Walk-away wealth deducts selling costs and capital gains tax above the §121 exclusion from the owner, and federal capital gains tax plus Washington’s capital gains excise tax from the renter’s portfolio. Washington’s excise exempts real estate entirely but taxes ETF gains at 7% above an inflation-indexed deduction ($278,000 for 2025) — and 9.9% on gains above $1 million, a threshold that is not indexed. Over a long horizon, a renter’s portfolio can cross it. Leverage is the owner’s engine; tax-favored liquidity is the renter’s. Both show up here.

Tax defaults reflect 2026 law: a $32,200 / $16,100 standard deduction, a $40,400 SALT cap (scheduled to rise 1% per year through 2029, then revert to $10,000 in 2030 — a change this model does not project), and the $750K mortgage interest limit. This is a model, not advice. Defaults are editable assumptions, not predictions — small changes flip the answer, which is the point.