IT’S ALL ABOUT THE MATH: I TURNED A $400,000 INHERITANCE INTO A $900,000 INVESTMENT — WHY I CHOSE TO RENT VS. OWNING A HOME

For years, the people in Lucy’s life have been telling her to buy a home. And she certainly can afford to. Seven years ago, she inherited about $400,000. Instead of spending it, she invested the money and left it alone.

Today, thanks to a strong stretch in the markets, that inheritance has grown to roughly $900,000. But at 28, Lucy isn’t convinced buying property is the obvious next step — and in Canada right now, the math is more complicated than the old adage “renting is throwing money away.”

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In this example, we’ll follow Lucy, a hypothetical 28-year-old, based on a common dilemma among young Canadians who come into money early: what to do when you can afford to buy, but the numbers don’t obviously favour it.

Lucy isn’t sitting on a six-figure salary wondering what to do with extra cash. She works in a restaurant in Ottawa, pays her bills and has been careful with the one big financial break she’s had. She pays $1,900 a month in rent, has no debt, no kids and no car payment. Her building was first occupied before November 15, 2018, which means it falls under Ontario’s rent increase guideline — in 2026, that guideline caps most rent increases at 2.1%. Her landlord can’t raise her rent by more than that without approval from the Landlord and Tenant Board (LTB), Ontario’s rental dispute tribunal, and must give her 90 days’ written notice before doing so. That gives Lucy more predictability.

Her mom sees things differently, though. To her, Lucy is in the perfect position to buy. One-bedroom condos in Ottawa have been selling for an average of about $385,500, according to Nesto. Lucy could purchase one without carrying a mortgage.

It’s the kind of situation that challenges the usual rent-versus-buy advice. Home prices across Canada climbed back above $700,000 on average in May 2026, and with affordability still stretched in many cities, the advice to buy as soon as you can doesn't fit every situation.

When renting can actually come out ahead

There are plenty of people who’ll say renting is “throwing money away,” but that only tells part of the story.

Owning a home comes with costs that don’t disappear after closing day: property tax, home insurance, maintenance, the occasional unexpected repair and, in Lucy’s case, condo fees. Even someone who pays cash still carries ongoing housing costs.

For Lucy, the comparison gets especially interesting. If she used $400,000 of her investments to buy a condo outright, she’d eliminate her monthly rent of $1,900, or roughly $22,800 a year. But she’d also be pulling a large sum out of the market and locking it into a single property.

The question Lucy keeps coming back to is whether saving that rent is worth giving up the chance for $400,000 to keep growing in a diversified portfolio.

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The tax bill a Canadian buyer can’t ignore

Here’s where the Canadian math looks different from the “just buy” advice Lucy keeps hearing.

Her $900,000 didn’t get there entirely tax-free. Anything beyond what fits inside a Tax-Free Savings Account (TFSA) is generally sitting in a taxable, non-registered account, and selling investments that have grown in value triggers a capital gain.

In Canada, only 50% of a capital gain is added to taxable income, and that amount is taxed at the seller’s regular marginal rate; there’s no separate, lower capital gains tax rate the way some assume. That means if Lucy sells part of her portfolio to fund a condo purchase, a share of the growth in that money becomes taxable income the year she sells.

Here’s the twist that works in her favour over the long term: a principal residence in Canada is exempt from capital gains tax when it’s sold, under the principal residence exemption. Money left in a non-registered investment account keeps facing tax on its growth, whereas a home someone lives in doesn’t. That’s a real argument for eventually owning — however, it’s just not a reason on its own to rush the purchase while she’s still deciding.

What buying would still cost her on the way in and out

Buying with cash also means budgeting for costs that a lot of first-time buyers underestimate. In Ontario, buyers typically pay land transfer tax (LTT), legal fees of roughly $1,000 to $1,600 and other administrative costs, generally totalling 1.5% to 4% of the purchase price. If Lucy ever sold, she’d also owe a real estate commission of 4% of the sale price, plus sales tax on that commission. On a $400,000 condo, that’s easily $20,000 or more leaving her pocket before moving costs are even counted.

Those transaction costs matter most to buyers who might move again within a few years. And they vary widely based on region. For example, real estate commissions across Canada range between 3% and 7%, and not all provinces charge LTT. Lucy, at 28, can’t say for certain where she’ll be living in five years — and that uncertainty is part of what’s keeping her on the sidelines.

What homeownership would still buy

For a lot of people, buying a home is about more than the numbers. Owning gives people something harder to measure: control. Generally, a landlord can’t decide to sell and leave a tenant searching for a new place in Canada — the new owner assumes responsibility for the tenancy, lease terms and rights established on day one. However, the rules on evicting or forcing a move are nuanced in each province and territory. Rent-controlled or not, a tenant is still living in someone else’s property, on someone else’s terms. If, for whatever reason, a tenant is forced to be evicted, they must be given 60 days’ notice and the termination date must fall on the last day of the rental period.

Homeowners can also use the equity they build later on, whether by downsizing, selling or borrowing against it, in a way renters simply can’t. Someone who enters retirement mortgage-free often has far more room in their budget than someone still paying rent every month, even with rent control in place.

But buying is also a bigger commitment. Selling requires time, planning and money in a way that ending a lease doesn’t. For someone who isn't sure where life is heading next, that flexibility carries real value.

Where this leaves Lucy

Lucy isn’t trying to figure out how to scrape together a down payment. She already has close to $900,000 invested and a rental situation that works, with rent increases capped by law. For now, she’s choosing to let her portfolio keep growing rather than concentrate a large share of her wealth into one property, in one city.

That could change. Someone who’s comfortable renting at 28 may feel differently in a few years — if they want more space, want to start a family or simply want a place they can make entirely their own.

Lessons for Canadians weighing rent versus buy

Lucy’s situation is unusual, but the questions she’s asking apply to anyone deciding between renting and buying in Canada right now.

• Know your rent protections before assuming buying is automatically cheaper. Check whether your unit is covered by your province's rent-control rules and what the current guideline actually allows.
• Price in the full cost of owning on top of the purchase price. Property tax, insurance, ongoing monthly condo fees and closing costs of roughly 3% to 7% for buyers across Canada add up fast.
• Understand what selling investments to buy a home will cost at tax time. Any capital gain in a non-registered account is 50% taxable the year it’s sold, at the seller’s marginal rate.
• Remember the principal residence exemption cuts both ways. It’s a long-term tax advantage of owning, but it only applies once someone owns and lives in the home, not before.
• Don’t let “everyone says” pressures replace the actual math. A parent’s advice, a friend’s timeline or a stranger’s opinion online isn’t a substitute for running the numbers on rent, ownership costs and what you give up when you move invested money into a property.

-With files from Melanie Huddart

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

2026-08-18T11:53:17Z