The 5% rule provides a more accurate comparison by including unrecoverable costs into the calculation. Unrecoverable costs are the money you spend that you cannot get back. For renting, unrecoverable costs are straightforward: it’s the money you spend on rent every month to continue living in your home. For a home you own, these costs are: property taxes, maintenance costs, and costs of capital (mortgage interest + opportunity costs). These three usually add up to 5% of the value of your home that you are paying in unrecoverable costs.