The "rent versus buy" calculators are useful tools for analyzing the short and long term economic effects of renting versus buying. These calculators focus on the difference in cash flows between renting and buying/selling and consider the tax effects of home ownership and the time value of money. These analyses do not consider the personal gratification of homeownership nor the greater logistical flexibility derived from renting.

For renting the analyses consider: 1) tenant's security deposit as a cash flow at the execution of the lease, 2) return of said deposit at the end of the tenant holding period, 3) payment of rent and any estimated annual increases, 4) payment for tenant's insurance and any estimated annual increases, and 5) utilities and any estimated annual increases.

For buying the analyses consider: 1) down payment, 2) closing fees, 3) proceeds received from the sale of the property net of real estate commissions, transfer taxes and federal and state capital gain taxes, 4) home owners insurance and any estimated annual increases, 5) utilities and any estimated annual increases, 6) water and sewer paid by the homeowner and any estimated annual increases, 7) estimated increase in the value of the property, and 8) any principle paid on the mortgage (amortizing loans only) during the time the property is held.

The three calculators for "rent versus buy" are 1) a comparison of a 5, 10, and 15 year holding period, 2) a comparison of a 5 and 10 year holding period, and 3) a 5 year holding period. The first two calculators run an analysis of "rent versus buy" and compare different holding periods, hence allowing us to compare the effects of renting versus buying over the short term (5 years) and long term (10 and 15 years).

The results displayed in the top table contain three highlighted areas, 1) a light gray area, 2) a light pink area, and 3) a white and light green area. The light gray area displays the cash flows from the sale of the property and the return of the security deposit from the rental. The proceeds from the sale of the property are net of any real estate commissions, any remaining mortgage balance, any transfer taxes and any state and federal capital gains taxes. This can also be observed on "line 8" from the below table under the section labeled "PROCEEDS FROM SALE (Buy/Sell)". Line 8 is derived from the three sections: 1) "PROCEEDS FROM SALE (Buy/Sell)", 2) "PROPERTY BASIS (Buy/Sell)", and 3) "DEFERRED TAXES (Buy/Sell)".