You will not to buy a house with 25 lacs in any major city, probably a garage or a one room shack. To say that they need to pay 12% interest on top of inflation - which will hit double digits pretty soon - is REDICULOUS. Very soon this dicussion will be moot for all middle class people. Only the elite will be able to buy - two bedroom appartments.
Calculation of IT exemption on Rent is fully wrong. Total rent is taken as exempted but per It rules it is only the execess of 10% of basic salaqry is exmptable not whole rent.
I had this dilemma all the time and after reading this article I got at least some clue on how to proceed. Though it is not a complete article taking into consideration the propery appreciation/depreciation, but it is a good starting point, which helps us to set our thinking to a proper direction.
One more vital point is missed out in the calculations, i.e. the differential amount between EMI and Rent can be invested in either equity / Fixed Deposits, which will definitely give Capital appreciation. With this savings you can buy the house in the decent locality of tier-2 cities and more over who will stay in these unplanned cities after 20 years which will be horrible for any kind of living.
Hence, I recommend in investing rather than running into debts for one particular asset.
One more suggestion is but 2 plots in any tier-2 cities for very leeser amount now. After your retirement, sell one plot and with that money bulid your dream house in the second plot and lead a comfortable life.
RE:Differential Amount | Rent | EMI
by ARIF AHMED FAROOQUI on Apr 30, 2007 10:12 PM Permalink
I endorse this opinion,It is how a middle class person can think of building ahouse/buying house of his choice-arif ahmed
Leave the calculation aside for the moment, practically Nobody rents same apartment for 20 yrs. After every 2-3 yrs owner would change tenant for more rent. Each time you need to displace your family & belongings to new place. So you will not have any social status where you stay & so on.
You have missed many things including the property resale value after 20 years, lease agreement period, cost of shifting, etc. ! Moral: Common sense is not so common!
First get me a person who is ready to enter into a lease agreement for 20 years. any lease agreement above 12 years attracts a huge stamp duty. u r misguiding a comman man
RE:Pls reply to points below
by sumit bansal on Apr 30, 2007 08:38 PM Permalink
In uttar pradesh even a lease agreement of more than 11 months it attracts stamp duty
If you own a house you allways have a great kind of sense of security, which is never there in rented house.In my opinion one should allways own atleast one house property even the females should also try to purchase house in there individual name if possible. I had bought a house in 1977 for mere 55000 now its cost is around thirty lac.As late you purchase it is more difficult to buy.
RE:what about sense of security?
by vikas vibhute on Apr 30, 2007 08:29 PM Permalink
I very much agree your views.I bought a house in 1980 for 1.82 lakhs today it is worth 40 lakhs suppose I lived in a rented flat for so many years I would have been at a total loss.
