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Rent Or Buy
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Rent Or Buy

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Published in: Economy & Finance, Business

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  • 1. My HOUSE Rent or Buy?
  • 2. 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
  • 3. Tax benefit
    • Under Rent
      • 40% of Basic Salary / HRA / Rent Paid in Actual which ever is lowest
      • 50% in case of metros
    • Under Housing Loan
      • Tax Benefit on Principal (Amount Exempted)= Rs 100000 @30%
      • Tax Benefit on Interest
      • (Amount Exempted) = 150000 @30%
  • 4. 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
  • 5.  
  • 6. 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
  • 7. 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