House to rent_or_ buy
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House to rent_or_ buy

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House to rent_or_ buy House to rent_or_ buy Presentation Transcript

  • My HOUSE
    Rent or Buy?
  • Benefit on Buying House
    Property value is appreciating
    Property can be pledged to take loan latter
    Pride of owning a house
    Tax is saved on principal & interest
    Rental income possible post retirement
  • Tax benefit
    Under Housing Loan
    Tax Benefit on Principal (Amount Exempted)= Rs 100000 @30%
    Tax Benefit on Interest
    (Amount Exempted) = 150000 @30%
    Under Rent
    40% of Basic Salary / HRA / Rent Paid in IN EXCESS OF 10 % basic - which ever is lowest
    50% of basic in case of metros
  • Benefit on Rented House
    Amount saved can be invested at higher returns
    Better life style, flexibility to spend and save.
    Can switch to better locality and larger house based on salary increase
    Tax saved on rent expense
    Can buy house on down payment latter
    No maintenance cost
    There can be savings on difference between actual rent and HRA
  • Assumptions
    House bought for own occupation
    Amount saved are reinvested at market returns
    Profile considered is that of a salaried employee
    Down payment made for acquiring the house is not considered as it may be equal to deposit for the rented house
  • Assumptions…
    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
    Interest rate risk is not considered
    Market return risk is not considered as the terms (10 years , 15 years) are sufficiently long
    Salary structure is considered to be flexible for tax planning