• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • About Us
  • Executive Team
  • Investors
  • Privacy Policy
  • Terms Of Use
  • Contact Us

  • Blog
  • Tax Services
    • E-file ITR for Salaried
    • E-file ITR for Business
    • TDS E-file for Business
    • Manage Tax Practice
  • Tax Optimizer
    • Optimize Tax – Salaried
    • Optimize Business Tax
  • Help
    • FAQs
    • Glossary
    • Resources
    • Product Tour
    • Tax Calculator
  • Efiling
  • Income & Investments
  • Tax Compliance
  • Tax Optimization
  • Tax Refunds

Buying House through Loan is Better than Renting

June 24, 2016 by Sudhir Kaushik

Buying a house is one of the most important decisions of your lifetime. If you have available down payment (typically 15% of house value), you can borrow balance 85% against the house you intend to buy.

Buying House for Tax Saving

The benefits of home loan interest deduction and repayment of principal will be more than the house rent allowance exemption.
Buying a house using home loan is also an investment for retirement. It is like a disciplined saving for your safe retirement. You can reverse mortgage the house after attaining 60 years of age. Your monthly expenses could be met by the tax-free amount you will receive from reverse mortgage.
The most important benefit of buying a house is the hidden appreciation of the value of property.

Buying House: The Flip side

However, the cash outflow is high in case you buy a house. For example, if you buy a house worth Rs. 50 lakh then you will need Rs 7.5 lakh for down payment and approx. Rs 47,000/- EMI (@10.5%, 15 yr loan). So, outflow in the first year is Rs 13 lakh. Whereas, you can rent such a property for approximately Rs 2 lakh (including 4 months security).
Buying a house is a long term decision as the cost of transfer/sale is very high. It includes stamp duty, brokerage, etc. Moreover, capital gain tax liability will also arise at the time of sale.
Though a rented house is easy on cash outflow, a home lease is typically given for only 11 months, which makes renting a house a short term plan. Your home could be the asset you give your children as a secure gift for generations. Buy a house if you are eligible for a home loan. If you delay the decision of buying a house, the value may so appreciate that you may not be able to afford it.

Filed Under: Tax Refunds

Primary Sidebar

E-mail Newsletter

  • Facebook
  • Instagram
  • LinkedIn
  • RSS
  • Twitter
  • YouTube

More to See

TDS RETURN FILING: know law, software process and benefits of outsourcing

September 21, 2022 By Aastha Sharma

How Salary Restructuring Helped in Saving Tax?

August 17, 2022 By Sudhir Kaushik

Tags

advance tax black money budget 2017 claims tax benefits CTC Direct Tax Burden e-file tax return elss ultimate returns form 16 gratuity hard earned money home loan nps HRA income expenses income tax declaration income tax department income tax return income tax saving investment declaration Investment tax saving investor financial needs long-term capital gains medical leave encashment National Pension System NPS plan your investments presumptive taxation scheme retirement benefits return filing deadline save tax section 80c self assessment tax service tax short-term capital gains Suggestions Budget 2017 tax tax-free tax details salaried taxpayers tax efficiency tax optimization tax return filing tax saving tax saving tips taxspanner undeclared income

Footer

Services

  • E-file Tax Returns
  • Tax Optimizer
  • Respond To ITD
  • Consult Experts
  • Tax Practitioners
  • TDS Returns

Help

  • Product Guide
  • FAQs
  • Tax Calculators
  • Glossary
  • Contact Us
  • Forget Password

Taxspanner logo
TaxSpanner is India’s largest and most trusted website that offers online preparation and filing of individual Income Tax Returns (ITR).

Read More

Copyright © 2023 · Span Across IT Solutions Private Limited.