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Should you rent or buy?

Put the same home side by side: bought with a mortgage, or rented while the money you'd have put down is invested. See which leaves you better off, and from which year.

A typical 55 m² two-room flat in Praha 5, at the area's median asking price and rent per m² today. See Praha 5's market

Start from an area

Pick a town, district or neighbourhood and a layout. The price and the rent become the area's medians today.

The home

Without the charges for services (heating, water, the lift).

If you buy

2.048.000 Kč of your own money. Under 36, banks may lend up to 90 %.

Worked out for 55 m²: repair fund, administration, insurance and property tax.

Over the years

Buy: after 10 years6,7 Mio. Kč

Rent: after 10 years5,6 Mio. Kč

The result

Buying comes out ahead from year 4. After 10 years you'd have 1.102.189 Kč more than if you rented.

A month in the first year

Buying
47.699 Kča month
Renting
27.500 Kča month
Buying
Mortgage: 43.677 Kč · Owner's costs: 1.630 Kč · Upkeep: 4.267 Kč · Tax relief: −1.875 Kč
Cash on day one
2.065.000 Kč
Mortgage: 8.192.000 Kč

What you'd have after 10 years

If you buy
6.737.732 Kč
If you rent
5.635.543 Kč
Break-even
Year 4
Homes for sale in Praha 5Homes to rent in Praha 5

What you'd have at each year's end

Year by year

Year by year
YearHome valueStill owedPaid to ownPaid in rentBuying: you'd haveRenting: you'd have
110.547.200 Kč8.069.819 Kč572.388 Kč330.000 Kč2.161.391 Kč2.395.236 Kč
210.863.616 Kč7.941.464 Kč574.512 Kč339.900 Kč2.597.761 Kč2.731.412 Kč
311.189.524 Kč7.806.622 Kč576.696 Kč350.100 Kč3.050.536 Kč3.073.541 Kč
411.525.210 Kč7.664.967 Kč578.940 Kč360.600 Kč3.520.370 Kč3.421.636 Kč
511.870.967 Kč7.516.153 Kč581.256 Kč371.412 Kč4.007.941 Kč3.775.713 Kč
612.227.096 Kč7.359.818 Kč583.644 Kč382.560 Kč4.513.959 Kč4.135.764 Kč
712.593.908 Kč7.195.584 Kč586.116 Kč394.032 Kč5.039.159 Kč4.501.803 Kč
812.971.726 Kč7.023.050 Kč588.636 Kč405.864 Kč5.584.316 Kč4.873.777 Kč
913.360.877 Kč6.841.797 Kč591.264 Kč418.032 Kč6.150.227 Kč5.251.712 Kč
1013.761.704 Kč6.651.383 Kč593.940 Kč430.572 Kč6.737.732 Kč5.635.543 Kč

Thinking of letting it instead? Work out its cash flow

How the comparison works

The same home, bought or rented, month by month for the years you stay. Money is never left idle: whoever pays less in a month invests the difference, and both earn the same return.

What it counts

  • Buying: the down payment and the purchase costs on the first day, then each month the mortgage, the owner's costs and upkeep. The home's value grows each year.
  • Renting: the rent, rising once a year. The charges for services are left out, because owners pay them too.
  • The renter invests what the buyer put down on day one. After that, each month, whichever side pays less invests the difference.
  • At each year's end the buyer sells: the home's value, less the mortgage still owed and the selling costs, plus their investments. The renter has their investments.
  • Mortgage interest on your own home lowers your income tax base, up to a yearly cap; the saving comes back once a year with the tax return.

What it leaves out

  • Inflation: everything is in today's crowns as they'll be paid, not adjusted to today's value.
  • Rate changes: the rate stays the same for the whole term, though real mortgages are re-fixed every few years.
  • Moving and furnishing, which both sides pay.
  • Tax on investment gains: shares and funds held for over three years are free of income tax in Czechia.
  • Risk: a home's value and investments can fall as well as rise, and neither is certain.

Every starting figure and its source

Verified figures come from the law or the ČNB, checked on the date shown. Assumptions are typical values: change them to yours.

Questions

Questions about renting or buying

Is it better to rent or buy in Czechia?

It depends on three things: how many years of rent the home costs, how long you'll stay, and what your money would earn elsewhere. Where homes cost many years of rent, renting and investing the difference can leave you ahead for a long time; where rents are high against prices, buying catches up sooner. Put in your own figures, or start from an area to use its live medians.

How long do I need to stay for buying to pay off?

The calculator shows the break-even year: the first year's end from which selling would leave you better off than having rented. Buying costs about 17.000 Kč in fees up front and selling about 3 % of the price at the end, so short stays favour renting.

What does an owner pay that a tenant doesn't?

The building's repair fund, its administration, insurance of the home, the yearly property tax and repairs inside the home. Tenants and owners both pay the charges for services such as heating and water, so the calculator leaves those out.

Can I deduct mortgage interest from my taxes?

Yes, for your own home. The interest lowers your income tax base by up to 150.000 Kč a year for loans from 2021, or 300.000 Kč for older ones, which saves 15 % of the interest you deduct. The calculator assumes you pay at least that much income tax in Czechia; switch the relief off if you don't.

How much do I need to put down?

At least 20 % of the price. The ČNB caps a mortgage at 80 % of the home's value, or 90 % for applicants under 36. On top come the purchase costs: the cadastre fee and a lawyer for the contract and escrow.

Is this financial advice?

No. It's a model with the assumptions shown on this page. A mortgage adviser can tell you what a bank would actually lend you and at what rate.

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