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

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.