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Should I buy or rent my home?

About this model and its assumptions

Model

Our calculator builds a model based on all the information you entered on the home specificities and your personal situation. The model calculates all the associated costs with owning your home and all the associated costs with renting your home.

Our model takes into account the tax savings you will make when buying based on the actual and applicable tax deductions in Luxembourg. Please refer to Nexvia Tax Smart Card for further information. The model also takes into account something known as opportunity cost that corresponds to the return from costs savings of one situation compared to another. For instance, the return you could have earned by investing your money instead of spending it in a down payment when buying. The calculator tabulates Return From Cost Savings at every part of the buying and renting situations. Finally our model calculates the expected home value appreciation, the outstanding mortgage balance as well as the Selling Cost to evaluate the Net Proceeds of the owning situation compared to the renting situation.

Renting

Upfront Costs include the rent Security Deposit and the Agency Fee, if applicable.

Recurring Costs include the Rent, the Rental Charges and the Renter’s Insurance.

Other Impacts correspond to the Return From Cost Savings (or opportunity costs) while renting and is calculated each year for both your Upfront Costs and your Recurring Costs.

Net Proceeds from renting equals the return of the rent Security Deposit.

Buying

Upfront Costs are the costs you incur when buying your home. These include (i) the Down Payment, (ii) the Home Acquisition Costs and (iii) the Mortgage Closing Costs.

Recurring Costs are expenses you will have to pay monthly or yearly when owning your home. These include the Principal payment, the Interest payment, the Property Charges & Maintenance, the Mortgage Insurance, the Property Tax & Communal Charges and the Homeowner’s Insurance.

Other Impacts include the Tax Savings and the Return from Cost Savings. The Tax Savings are the savings you make when buying a property and financing it through a mortgage (which interest and insurance premiums are fully or partly deductible from your taxable income). The Return From Cost Savings (or opportunity costs) while buying is calculated each year for both your Upfront Costs and your Recurring Costs, if applicable.

Net Proceeds is the amount of money you receive from the sale of your home minus the Selling Cost and the outstanding Mortgage Balance. Note that our model does not consider any potential indemnity for early repayment of your mortgage. Should you sell your property in the first 2 years after its acquisition, you will also have to pay the used tax credit you have benefited from (that has been used to lower your Stamp Duty at acquisition). Note that no capital gain tax exists on the sale of primary residence in Luxembourg. We have deliberately shown this in our calculation for clarification.

If your Buying Cost (including proceeds) is negative, it means you have done great: the net gain you made out of your home acquisition covers your Buying Cost over time!

Assumptions

Assumptions used for this model are similar to the assumptions used in our Acquisition Costs and Monthly Charge Calculator. Other assumptions directly come from the information you have entered and applicable tax deductions in Luxembourg. For further information on the tax applicable to properties in Luxembourg, please refer to Nexvia Tax Smart Card.