Benefit on Buying House<br />Property value is appreciating <br />Property can be pledged to take loan latter <br />Pride of owning a house <br />Tax is saved on principal & interest <br />Rental income possible post retirement<br />
Tax benefit<br />Under Housing Loan<br />Tax Benefit on Principal (Amount Exempted)= Rs 100000 @30%<br />Tax Benefit on Interest <br /> (Amount Exempted) = 150000 @30%<br />Under Rent<br />40% of Basic Salary / HRA / Rent Paid in IN EXCESS OF 10 % basic - which ever is lowest<br />50% of basic in case of metros<br />
Benefit on Rented House<br />Amount saved can be invested at higher returns <br />Better life style, flexibility to spend and save. <br />Can switch to better locality and larger house based on salary increase <br />Tax saved on rent expense <br />Can buy house on down payment latter <br />No maintenance cost <br />There can be savings on difference between actual rent and HRA <br />
Assumptions<br />House bought for own occupation<br />Amount saved are reinvested at market returns<br />Profile considered is that of a salaried employee<br />Down payment made for acquiring the house is not considered as it may be equal to deposit for the rented house<br />
Assumptions…<br />Rent increase is not considered. Neither is the cost of increase in maintenance and increase in HRA. As these can be considered to be negated against each other<br />Interest rate risk is not considered<br />Market return risk is not considered as the terms (10 years , 15 years) are sufficiently long<br />Salary structure is considered to be flexible for tax planning<br />
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