Lucy bought a house for $100,000. Lucys annual cost of ownership net of tax savings is exactly equal to the annual rent she would have paid to live in the same house. The house price grows 4.5% annually (compounded annually).

Suppose buying costs are 5% (of the purchase price of the house) and selling costs are 8% (of the selling price of the house). Lucy owns the house for 30 years. Lucy buys the home with an 80% LTV IO mortgage. The interest rate is irrelevant because the cost of ownership net tax shield is equal to rent. What is Lucys annualized IRR?