California Buy vs Rent Calculator
May 23, 2025
Why California is Different
Understanding the unique protections that shape California's housing market
Proposition 13: The Homeowner's Advantage
California's Proposition 13, passed in 1978, fundamentally changes the buy vs. rent calculation by capping annual property tax increases at just 2% per year, regardless of how much your home appreciates in value. This means that while your neighbor's rent might double over a decade, your property taxes remain predictably low. For homeowners, this creates a massive long-term financial advantage that compounds over time—especially in high-appreciation areas like the Bay Area and Los Angeles.
Renter Protections: AB 1482 and Local Controls
California also provides significant protections for renters through the Tenant Protection Act (AB 1482), which applies statewide to most rental properties built more than 15 years ago. This law caps annual rent increases at 5% plus local inflation, with a maximum of 10% per year. This protection helps moderate rent growth compared to other states with no rent control.
San Francisco Example: Enhanced Rent Control
San Francisco goes even further with its own rent control ordinance. For buildings constructed before June 13, 1979, annual rent increases are typically limited to around 60% of the Bay Area Consumer Price Index (CPI)—often resulting in increases of just 2-3% per year. The city also requires "just cause" for evictions and provides additional tenant protections. This means long-term renters in older San Francisco buildings can maintain relatively stable housing costs, significantly altering the financial comparison with buying.
How Our Calculator Accounts for California's Unique Market
Our calculator specifically models these California advantages: Prop 13's property tax caps are built into the buying calculations, while the rent increase inputs allow you to model the moderate rent growth typically seen under AB 1482 protections. For San Francisco residents, you can input even lower rent increase rates (2-3%) to reflect the city's additional rent control protections for older buildings.
2025 SALT Deduction Cap Increase: A Game-Changer for California Homeowners
Starting with the 2025 tax year, the State and Local Tax (SALT) deduction cap has increased from $10,000 to $40,000 for most taxpayers. The SALT deduction combines both state income taxes and property taxes into a single deduction limit. This represents a significant change that dramatically improves the tax benefits of homeownership, especially for California residents who face both high state income taxes and substantial property tax bills.
Impact on California Homeowners
For many California homeowners, the previous $10,000 combined cap was entirely consumed by state income taxes alone, leaving no room to deduct property taxes. With the new $40,000 combined limit, homeowners can now deduct both their California state income taxes AND a substantial portion of their property taxes within the same deduction category, significantly increasing the tax benefits of homeownership. This change is particularly beneficial for middle and upper-middle income earners in high-cost areas like the Bay Area and Los Angeles.
Calculator Inputs
Adjust the values below to match your specific situation
Time Horizon
Results: Buy vs. Rent in California
Based on your inputs over a 10 year period
Buying a Home
Renting
Recommendation
30-Year Financial Comparison
This interactive chart shows the projected net financial position over 30 years for both buying and renting scenarios. Hover over data points to see detailed values. The comparison is based on your specific inputs and current financial conditions.
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