Rent Or Buy

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Rent Or Buy

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

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