Rent vs Buy Calculator India

The calculator compares two paths over your chosen time horizon. The Buy path accounts for down payment, stamp duty, EMI payments, maintenance, property tax, Section 24 tax benefits, and property appreciation. The Rent path accounts for monthly rent (growing annually), and invests the money you would have spent on down payment, stamp duty, and the monthly surplus (if buying costs more) at your expected investment return rate. The path with higher projected final wealth is highlighted.

When you pay 20% down on a property, that money can no longer earn investment returns. For example, a ₹30 lakh down payment on a ₹1.5 crore Mumbai flat, invested at 12% for 15 years, could grow to over ₹1.64 crore. This opportunity cost is a significant factor that most people overlook when deciding to buy.

Under Section 24(b) of the Income Tax Act, you can claim a deduction of up to ₹2,00,000 per year on the interest paid on a home loan for a self-occupied property. This benefit effectively reduces the cost of your EMI depending on your tax bracket. If you are in the 30% bracket, the maximum annual saving is ₹60,000.

The answer depends on property prices, rental yields, expected appreciation, and your investment return rate. In cities like Mumbai where the price-to-rent ratio (how many months of rent equal the property price) is very high (300x+), renting often wins for horizons under 10-15 years. In cities with high appreciation like Hyderabad and Bangalore, buying can break even sooner. Use the calculator above with your specific numbers to get a personalised answer.

For a diversified equity mutual fund portfolio (e.g., index funds), a long-term pre-tax Compound Annual Growth Rate (CAGR) of 10-12% is a reasonable assumption based on historical Nifty 50 returns. If you prefer debt instruments, use 6-8%. The higher the return rate, the more renting tends to win because your down payment and surplus grow faster.

Stamp duty and registration charges add 7-12% to your property acquisition cost depending on the state. At a typical property appreciation of 5-7% per year, it takes approximately 1.5 to 2.5 years just to recover these upfront costs. In high stamp duty states like Maharashtra (7% stamp duty + 1% registration) and Tamil Nadu (7% + 4%), this recovery period is longer. This is a key reason why buying for short horizons (under 5 years) rarely makes financial sense.

Rent escalation is the annual increase in rent, typically 5-10% in Indian cities. Higher rent escalation makes buying more attractive over time because the cost of renting increases while your EMI stays fixed (assuming a fixed-rate loan). For example, a rent of ₹25,000/month at 8% annual escalation becomes ₹54,000/month after 10 years. However, if your investment returns on the surplus exceed the escalation rate, renting may still win. This calculator accounts for rent escalation in the comparison.

Beyond the purchase price and stamp duty, buyers face several recurring costs: (1) Society maintenance charges — ₹3,000-₹15,000/month depending on amenities. (2) Property tax — 0.5-1% of property value annually. (3) Home insurance — ₹2,000-₹10,000/year. (4) Repairs and upkeep — budget 1-2% of property value annually. (5) Sinking fund and corpus fund contributions. For a ₹1 crore property, these can add ₹2-4 lakh annually, which renters do not bear. This calculator includes maintenance costs in the buy path.

Yes, property appreciation rates vary widely across Indian cities. Hyderabad and Bangalore have seen 8-12% annual appreciation in prime micro-markets over the last 5 years due to IT sector growth. Mumbai and Delhi NCR have seen slower appreciation of 3-5% in established areas, though some peripheral zones have done better. Pune offers moderate 5-7% appreciation. These are averages — specific micro-market performance can vary. Use the city presets in this calculator as starting points and adjust appreciation based on your specific locality.

The rent vs buy comparison assumes you sell the property at the end of the chosen time horizon. The resale value depends on cumulative appreciation minus selling costs (typically 1-2% brokerage plus any applicable capital gains tax). Under Section 54, LTCG on property held over 2 years can be exempted if reinvested in another property. Without the Section 54 exemption, gains are taxed at 20% with indexation benefit. The calculator factors in the final property value as your wealth in the buy path.

NRIs face additional challenges when buying property in India: managing from abroad, finding reliable tenants, dealing with maintenance, repatriation of sale proceeds (limited to 2 properties under FEMA), and paying higher TDS on rental income (30% for NRIs vs slab rate for residents). The opportunity cost is also different — NRIs may have access to investments in their country of residence with 7-10% returns in a stronger currency. Unless the NRI plans to return to India, renting and investing in global diversified portfolios often provides better risk-adjusted returns.

The price-to-rent ratio is the property price divided by the annual rent for a comparable home. In India, this ratio ranges from 200x-400x in major cities. For example, a flat worth ₹1.2 crore renting at ₹35,000/month (₹4.2 lakh/year) has a ratio of about 286x. A ratio above 250x generally favors renting, while below 150x favors buying. Mumbai often exceeds 350x in premium areas, strongly favoring renting, while smaller cities like Jaipur or Kochi at 150-200x can make buying more attractive.