Rent vs. Buying in NYC: Is It Time to Turn Your Rent Check Into Equity?
Quick answer: If you plan to stay 5+ years, want predictable housing costs, and can put 10–20% down, buying in NYC often wins on after‑tax cost + equity + appreciation. If you’ll move in ≤2–3 years or need maximum flexibility/liquidity, renting still makes sense—unless you buy a condo and later rent it out.
Key 2025 takeaways (NYC‑specific)
- Rates: The average 30‑year fixed was 6.56% as of Aug 28, 2025 (Freddie Mac PMMS).
- Rents: Manhattan median rent ≈ $4,700 (Jul 2025, Elliman/Miller Samuel).
- Taxes: The 2025 law often called the “One Big Beautiful Bill Act” raised the federal SALT cap to $40,000 for many filers from 2025–2029 (with income‑based limits), then reverts.
- Mortgage‑interest deduction (federal): Still capped at $750k of acquisition debt for post‑12/15/2017 loans.
- New York State: NY itemized deductions use rules largely based on pre‑2018 federal law—you may itemize in NY even if you take the federal standard deduction (NY AGI limits apply).
1) Renting vs. Buying: the 2025 NYC cost picture
Month‑to‑month, renting can look cheaper. But once you factor in tax savings, principal pay‑down (equity), and price growth, the long‑run math often tilts toward buying—especially for 5+ year horizons.
Illustrative example (Manhattan‑typical price point)
- Purchase price: $2.25M condo
- Down payment (20%): $450,000
- Mortgage: $1.8M @ 6.56% (30‑yr fixed)
- Monthly principal & interest (PI): $11,448
- Plus: taxes/common charges/insurance/maintenance for total “PITI+” (varies by building)
Compare to renting: Class‑A rentals in similar locations often list in the mid‑$4k to $8k+ range depending on size/amenities.
Why the long‑term view flips the script
- Principal is forced savings (you keep it). Year‑1 interest here is about $118,080, and each payment also reduces principal.
- Tax benefits—mortgage interest + a larger SALT window (2025–2029 for many filers)—can lower after‑tax costs.
- Appreciation + amortization compound your net worth over time.
| Scenario | Monthly Outlay | What You Keep |
|---|---|---|
| High‑end rental | $4,700–$8,000+ | $0 (no equity) |
| Buy $2.25M condo | $11,448 PI (+ taxes/fees) | Principal pay‑down + potential appreciation + tax benefits |
Note: Use your actual quotes (rate, insurance, taxes, common charges) for precision; this is illustrative only.
2) Tax benefits owners get (renters don’t)
Mortgage‑interest deduction (federal)
Deduct interest on up to $750,000 of acquisition debt for mortgages originated after 12/15/2017 (older loans may use the prior $1M cap). See IRS Pub. 936 and your CPA for specifics.
SALT—bigger (temporary) cap
For 2025–2029, the federal SALT deduction cap is $40,000 for many filers (with income‑based phase‑downs). Under current law, it reverts in 2030. Property taxes + state income taxes can again reduce federal taxable income.
New York State itemizing
NY lets you itemize using rules tied to 2017 federal law—you may deduct mortgage interest and property taxes on your NY return even if you take the federal standard deduction (NY has its own high‑income limits).
Capital‑gains exclusion when you sell
Meet the use/ownership tests and exclude up to $250k (single) / $500k (married filing jointly) of gain on your primary residence.
3) Equity, appreciation & wealth‑building
- Equity = paying yourself first: Over 5–10 years, principal reduction alone can be six figures+.
- Long‑run appreciation: NYC cycles, but quality assets in prime locations tend to hold value and grow over time. Combine appreciation with amortization for powerful wealth effects.
4) Lifestyle: flexibility vs. stability
Renting (flexibility)
- Easy to relocate (new job/neighborhood)
- No repair/assessment responsibility
- Great short‑term option while you learn the city
Owning (stability)
- Payment predictability with a fixed rate
- Freedom to renovate/optimize (board rules apply)
- Option value: Many condos permit renting with fewer restrictions than co‑ops (always check building policies)
5) When renting still makes sense (+ the condo twist)
Renting fits if you: expect to move in ≤2–3 years, want to keep cash liquid (10–20% down on $1M–$3M is real money), prefer zero maintenance, or are still test‑driving boroughs/blocks.
Twist: Buy a condo, live in it now, rent it out later. You preserve your foothold and let a tenant help carry costs while equity grows. (Sublet policies vary by building; co‑ops are generally more restrictive.)
FAQs
Is it worth buying if I may leave NYC in a few years?
Often yes—buy a condo and convert it to a rental if you move. That preserves your foothold and can turn a short stay into a long‑term wealth play (subject to building rules and taxes).
Do I really need 20% down?
Not always. Many condo buyers use 10–15% down (co‑ops often require 20%+). A larger down payment lowers monthly cost, but you have options.
What tax perks will I actually feel?
Mortgage‑interest deduction (federal up to $750k of acquisition debt for post‑2017 loans), the expanded federal SALT window in 2025–2029 (with income‑based phase‑downs), and NY’s itemized deductions—talk to your CPA.
What if the market dips after I buy?
Markets move. Focus on a 5–10 year horizon, buy quality, and let amortization + time work. Historically, longer holds reduce risk.
Co‑op or condo if I want flexibility?
Condo. You’ll generally have easier rental policies and fewer restrictions (verify building rules; short‑term rentals are restricted).
Talk Through Your Numbers in 30 Minutes
I’ll model your after‑tax monthly, equity build, and break‑even using your actual rate, taxes, and building fees.
Sources
- Freddie Mac PMMS: Rates 6.56% (Aug 28, 2025)
- Elliman/Miller Samuel: Manhattan Median Rent (Jul 2025)
- IRS Publication 936: Mortgage‑interest deduction ($750k post‑2017)
- IRS Pub 523 / Topic 701: Capital‑gains exclusion ($250k/$500k)
- OBBB 2025 SALT expansion: Bipartisan Policy Center; Congress.gov; Tax Foundation
- NY Tax Dept.: Itemized deductions (NY decoupling from certain TCJA limits)