Is Buying Actually Better than Renting in Toronto?
Is buying property truly better than renting in the City of Toronto?
Most real estate agents will tell you the same thing: buying is always better than renting.
Toronto is a world-renowned city with a highly desirable cultural scene that increases property value throughout the GTA year over year. Owning property here means you have a physical asset and a growing, stable investment that will carry wealth into the future.
Compared to renting, owning the property you live in also means you're paying off your mortgage rather than your landlords. You are actively contributing to your wealth rather than the financial portfolio of another.
Alongside the historical significance of owning land, there are many benefits to holding property, which is why it’s viewed as an esteemed asset in the investing world.
Here are some notable pros to owning property in Toronto
1. Holding a physical asset
2. Capital Gains Tax Exemption
When you sell your principal residence, you are exempt from paying any taxes on the gain
3. No landlords
4. Maintenance on your terms
5. Financing options
6. Investing in YOUR mortgage
7. Property value appreciation
8. Able to renovate, house hack, sell, or rent
While buying may be the dominant agent-recommended option, sometimes owning property looks better on paper than in reality, especially for Torontonians.
With rising gas prices and post-pandemic inflation, the cost of living for Toronto homeowners has increased by 38% since 2021, according to LowestRates.ca. Meanwhile, the cost of living for renters increased by 14% over the past year. A separate report from LowestRates.ca shows that the average monthly price of living for renters in Toronto is $2,067, while homeowners’ budget for closer to $5417.
In a booming city like Toronto, the hard truth is that there is a significant difference between the financial strain of renting versus buying. For many dwellers, renting is the smartest choice as prices continue to inflate.
Here are some pros to renting in Toronto
1. Minimal costs
No mortgage payments, interest, closing fees, expensive down payment, insurance costs, or property tax
2. More flexibility to move
3. Less concern over lowering real estate value
Renting is arguably the more cost-efficient option for individuals who want to live comfortably in or around the city and save money. With this said, the pros to buying stand firm and support the concept of saving while renting to eventually build wealth with real estate.
Real estate agents actively argue in favour of buying since holding property has always been a means of creating generational wealth. Of course, renting may be the best option right now, but buying is a great goal to set for the future.
Best practices for renters interested in eventually investing in property?
1. Prioritize saving over leisure spending
2. Pay off debts and keep your credit score in check
3. Research and plan around the First Time Homebuyers Program
4. Use a Tax-Free Savings Account
5. Share a car and avoid high-priced automobile expenses
Lastly, remember that real estate agents are here to help! Whether you plan to invest soon or within a few years – consulting with a real estate agent, mortgage agent, or credit counsellor can provide you with the necessary steps and highlight key markers in your home buying journey to lighten the load of saving up for a down payment.
Owning property in Toronto is possible and highly rewarding! Reach out to your fellow real estate agent and get started on a real estate action plan that meets your wants, needs, and goals.
