Ah, the age-old question. The decision to lease or buy a penthouse hinges on several key factors (obviously), and both paths offer unique advantages/drawbacks that go beyond just the cost.
Let’s go through them, one by one:
1. Upfront & Ongoing costs
Leasing a penthouse requires significantly less initial capital. Typically, you’ll need a security deposit plus first and last month’s rent. Buying, on the other hand, requires a substantial down payment (often 20–30%) and closing costs, easily amounting to hundreds of thousands or even millions upfront.
Monthly costs also differ. With leasing, rent is predictable and usually includes maintenance, though you might pay for some utilities and renter’s insurance. Buying adds layers: mortgage payments (which include both interest and equity), property taxes, HOA fees, maintenance, insurance and potential future repairs.
Winner: Lease
2. Wealth building
Buying allows you to build equity over time and potentially benefit from property appreciation, especially since penthouses are limited in supply, high in demand and often retain long-term value (especially in prime locations.) Leasing, by contrast, builds no equity, but preserves liquidity and offers flexibility with your capital.
Penthouse ownership also offers potential deductions for mortgage interest and property taxes, and possible capital gains exemptions after two years of residence. Leasing doesn’t provide tax breaks, unless the space is used for business purposes.
Winner: Buy
3. Flexibility vs. Control
Leasing is ideal if you’re uncertain about staying in one location or anticipate a job change. It’s easy to move after the lease ends without worrying about selling a high end property. Buying, of course, means you may need to wait months or even years to sell the place (due to its niche market and high price point), which is often untenable for people who need to make a lifestyle change relatively quickly.
Buying does allow owners to enjoy complete control over renovations, upgrades and design…which is perfect for those who want to create a truly personalized space. Lessees are typically limited to cosmetic changes, if any, and may be required to restore the unit before moving out.
Winner: Both
4. Lifestyle
Both buyers and renters enjoy the same building amenities: private elevators, rooftop pools, gyms and concierge services. But owners are also responsible for their unit’s upkeep and may share in the cost of major building repairs through special assessments.
Tenants benefit from a low maintenance lifestyle, with most repairs handled by building management or the landlord. Owners must manage all issues inside their unit, which can be costly and time consuming, especially in penthouses that often require specialized repairs due to unique features.
Winner: Lease
5. Long-term considerations
After a number of years, buying can pay off through appreciation and equity building. Additionally, ownership opens the door to future rental income. If you move but keep the property, penthouses can command premium rents. This isn’t an option for renters, who simply walk away with nothing at the end of their lease.
For estate-planning purposes, penthouses can be passed on to heirs or used as collateral. Leasing offers no legacy benefit or asset ownership.
Winner: Buy
Verdict? It’s a draw.
Here’s my recommendation framework
Buy the penthouse if you:
- Plan to stay for 5+ years
- Have strong, stable income and significant liquid assets
- Want full control over your space and design
- View the penthouse as part of a long-term investment or legacy
- Found a unique property in a prime location
Lease the penthouse if you:
- Prioritize flexibility and mobility
- Prefer lower upfront costs and fixed monthly expenses
- Are uncertain about long-term living plans
- Want to preserve capital for other investments
- Are testing a building or neighborhood
Last thought: Consider going hybrid
Some prospective owners decide to lease the unit first to test the lifestyle and location, then purchase when the right opportunity arises. This trial period strategy can help you avoid buyer’s remorse on a major investment like a luxury penthouse.
If/when you start looking, consider inquiring about such an arrangement, often known as a “lease to own” agreement or lease-purchase option.