Rent vs buy calculator · India · month-by-month wealth simulation
"Rent is money down the drain" is not an argument. It is a slogan.
Every Indian family has heard it, and it settles nothing — because the interest on a home loan is money down the drain too, and so are stamp duty, registration, brokerage, maintenance, property tax and the capital gains tax you pay on the way out. The honest question is not whether rent is wasted. It is: after twenty years, which of the two of you is richer?
That question has an answer, and it is arithmetic rather than opinion. This rent vs buy calculator runs both lives month by month. The buyer pays the EMI, the stamp duty, the maintenance and the exit tax, and ends owning a property. The renter pays rent, invests the down payment on day one and invests every rupee the buyer spent above their rent, and ends owning a portfolio. Whoever finishes with more, wins.
What buying actually costs in India, beyond the price
The sticker price is the smallest surprise in the transaction. These are the costs that sit around it:
- Stamp duty and registration — 5% to 11% of the property value depending on the state, paid on day one and never recovered.
- Home loan interest — on a 20-year loan at 8%, roughly equal to the amount borrowed.
- Maintenance and society charges — a recurring cost that rises with time and has no equivalent for the renter.
- Property tax — annual, municipal, and permanent.
- Brokerage — commonly around 1–2% on the way in, and again on the way out.
- Capital gains tax on exit — 12.5% on long-term gains, unless the proceeds are reinvested under Section 54.
- The opportunity cost of the down payment — the largest and least visible of them all.
That last one decides most of these comparisons. A 20% down payment on a ₹1 crore flat is ₹20 lakh. Invested at 12% for twenty years, ₹20 lakh becomes roughly ₹1.93 crore. Any comparison that treats the down payment as merely "spent" rather than "not invested" has already decided the answer before it starts — and almost every comparison you will read does exactly that.
Stamp duty and property prices by city
Stamp duty is a state levy and varies widely. These are the figures the calculator starts from; you can override every one of them.
Indicative 2BHK price, monthly rent, combined stamp duty and registration, and long-run appreciation assumption. Many states offer a 1% concession where the buyer is a woman.
| City | Typical 2BHK | Monthly rent | Stamp duty + reg. | Rental yield |
|---|
| Mumbai | ₹2.20 Cr | ₹60,000 | 7% | 3.3% |
| Delhi NCR | ₹1.20 Cr | ₹35,000 | 6% | 3.5% |
| Bengaluru | ₹1.00 Cr | ₹35,000 | 5.6% | 4.2% |
| Hyderabad | ₹90 L | ₹30,000 | 7.5% | 4.0% |
| Pune | ₹85 L | ₹28,000 | 7% | 4.0% |
| Chennai | ₹80 L | ₹25,000 | 11% | 3.8% |
| Kolkata | ₹60 L | ₹20,000 | 7% | 4.0% |
| Ahmedabad | ₹55 L | ₹17,000 | 5.9% | 3.7% |
| Tier-2 city | ₹45 L | ₹14,000 | 7% | 3.7% |
Look at the yield column, because it is the quiet centre of this whole question. Indian residential rental yields sit around 3–4%. Renting a ₹1 crore flat in Bengaluru costs about ₹4.2 lakh a year; owning the same flat on a loan costs roughly ₹8 lakh a year in EMI alone, of which most is interest in the early years. Renting is cheaper per month, almost everywhere in India, for a long time. Buying wins — when it wins — on appreciation and on the forced saving in the principal, not on monthly cost.
Chennai deserves a separate mention: at around 11%, its stamp duty and registration alone is a larger one-time cost than two years of rent.
The tax side, in both regimes
Home loan tax relief is the argument most often used for buying, and it has quietly shrunk.
| Relief | Old regime | New regime |
|---|
| Section 24(b) — interest, self-occupied | Up to ₹2,00,000 a year | Not available |
| Section 24(b) — interest, let out | Full interest, set-off capped at ₹2 lakh a year | Against rental income only |
| Section 80C — principal repaid | Within the ₹1.5 lakh limit | Not available |
| Stamp duty and registration | Within 80C, year of purchase | Not available |
| HRA exemption while renting | Available | Not available |
Under the new regime, buying has no income tax advantage at all for a self-occupied home. No Section 24(b), no 80C on the principal, no relief on the stamp duty. And since the new regime is the default and now suits most salaried people, the tax argument for buying has quietly disappeared for a large share of Indian buyers. Renting loses HRA in the new regime too, so both sides lose a benefit — but the buyer loses more.
On exit, long-term capital gains on property are taxed at 12.5%. Section 54 removes the tax entirely if the gain is reinvested in another residential property within the prescribed period, which matters for anyone treating a flat as a stepping stone rather than a destination. The calculator lets you set both.
How the simulation actually runs
Both lives are simulated month by month over your horizon, from the same starting cash.
The buyer
- Pays the down payment, the stamp duty, the registration and the brokerage on day one.
- Pays the EMI every month, with the interest and principal split recomputed each month.
- Pays maintenance and property tax, both rising with inflation.
- Claims whatever tax relief the chosen regime allows.
- At the horizon, sells: property value, less selling costs, less the outstanding loan, less capital gains tax.
The renter
- Invests the buyer's entire day-one outlay — down payment, stamp duty, registration, brokerage — on day one.
- Pays rent, which rises every year at the rate you set.
- Invests the difference every month whenever the buyer's outgo is higher than the rent.
- Claims the HRA exemption where the regime allows it.
- At the horizon, redeems: corpus, less equity capital gains tax, plus the deposit returned.
The two numbers are then compared. The calculator also reports the break-even year — the point at which buying overtakes renting — which is usually the most useful single output. If the break-even is year 14 and you expect to move in six years, the decision has been made for you.
How to use this rent vs buy calculator
- Pick your city, or enter your own numbers. Price, rent and stamp duty pre-fill from the city; every one can be overridden, and yours will differ from the average.
- Set the down payment and the loan rate. Use the rate you have actually been offered.
- Set your horizon. The honest answer here is how long you will really stay — not how long the loan runs. This input changes the verdict more than any other.
- Set the two growth rates. Property appreciation and your expected investment return. Be as sceptical about the first as the second; Indian residential property has had long flat stretches.
- Choose your tax regime and enter your rent. Section 24(b) and HRA only apply in the old regime.
- Read the verdict and the break-even year. Then open the Year-by-Year tab to see where the lines cross.
- Run the sensitivity matrix. It varies appreciation against investment return so you can see how fragile the answer is. If a small change in assumptions flips the verdict, the decision is not really financial.
What the numbers cannot tell you
This is a financial calculator and it answers a financial question honestly. It does not price the things that make people buy anyway, and those are not irrational:
- Security of tenure. A landlord can ask you to leave. Moving with school-age children is a cost that does not appear in any spreadsheet.
- Forced saving. The renter only wins if they actually invest the difference every month for twenty years. Most do not. A home loan is a savings plan with a legal enforcement mechanism, and for many households that is its real value.
- Freedom to modify. You cannot renovate a rented flat.
- Family expectation. Real in India, and worth naming rather than pretending away.
- Mobility. The renter can change city in a month. The owner cannot, and a career often turns on that.
Use the number as one input into the decision, not as the decision.
Frequently asked questions
Is it better to rent or buy a house in India?
For short horizons, renting almost always wins — stamp duty, registration and brokerage are large one-time costs that need years of appreciation to recover. Beyond roughly ten to fifteen years, buying usually wins if property appreciates near your investment return. With Indian rental yields at 3–4%, renting is cheaper monthly nearly everywhere; buying wins on appreciation and forced saving, not on monthly cost.
How many years does it take for buying to beat renting?
Typically somewhere between eight and fifteen years, depending on stamp duty, the loan rate, appreciation and what the renter earns on their investments. In Chennai, where stamp duty and registration approach 11%, the break-even is meaningfully later than in Bengaluru at 5.6%. The calculator reports your exact break-even year rather than a range.
What is stamp duty in India and how much is it?
A state tax on the registration of a property transfer, paid by the buyer. Combined with registration charges it ranges from about 5% to 11% — around 5.6% in Bengaluru, 6% in Delhi, 7% in Mumbai, Pune and Kolkata, 7.5% in Hyderabad and about 11% in Chennai. Several states give a concession of about 1% where the buyer is a woman.
Does the new tax regime still allow home loan deductions?
Not for a self-occupied property. Section 24(b) interest relief, 80C on principal repayment and 80C on stamp duty are all unavailable in the new regime. For a let-out property, interest can still be set against rental income. If you are in the new regime, the tax case for buying is essentially gone.
Can I claim HRA and a home loan together?
Yes, in genuine cases — renting in the city where you work while repaying a loan on a property elsewhere or one that is let out. Both are old-regime claims. Neither exists in the new regime.
What is the LTCG tax on property in India?
Long-term capital gains on property are taxed at 12.5%. Section 54 exempts the gain entirely if it is reinvested in another residential property within the prescribed period, and Section 54EC allows investment in specified bonds within six months. The calculator models both the tax and the Section 54 exemption.
What is a good rental yield in India?
Residential yields run about 2.5% to 4.5% across Indian cities — low by global standards, which is precisely why renting is cheaper than owning on a monthly basis here. Commercial property yields more but is a different asset with different risks. A yield below 3% says the property is priced for appreciation, not for income.
Is a home loan good for saving tax?
Under the old regime it helps: up to ₹2 lakh of interest under Section 24(b) and principal within the ₹1.5 lakh 80C limit. But you are spending a rupee of interest to save about thirty paise of tax. Tax relief is a discount on a cost, never a reason to take one on.
Should I make a bigger down payment?
It depends on your loan rate against your expected return. A larger down payment is a guaranteed saving at the loan rate; investing it is an uncertain gain. It also cuts your EMI and your total interest. Test it both ways in the calculator — the answer moves with the rate.
Does the calculator account for property maintenance?
Yes — monthly maintenance and annual property tax are charged to the buyer and grown with inflation. Both are real costs the renter does not carry, and leaving them out is a common way these comparisons flatter buying.
What appreciation rate should I assume for Indian property?
Long-run residential appreciation across Indian cities has broadly tracked 5–8% a year, with long flat periods in between. Be sceptical of any assumption above 8%, and run the sensitivity matrix — if the verdict only holds at 10% appreciation, it is not a robust verdict.
Does it work for under-construction property?
Partly. It does not model construction delay, the pre-EMI period or the risk of non-delivery — all of which are real, and all of which weigh against buying. Treat an under-construction result as optimistic.
Is my data stored?
The whole simulation runs in your browser. Your figures stay on your device.
Is it free?
Everything on this page is free to read. Running the simulation needs an InvestVerdict account.
Glossary
- Stamp duty
- A state tax on registering a property transfer, 5–11% of value, paid by the buyer and never recovered.
- Registration charge
- A further fee, commonly about 1%, for recording the transfer with the sub-registrar.
- Rental yield
- Annual rent divided by property value. Indian residential yields sit around 3–4%.
- Opportunity cost
- What the down payment would have earned had it been invested instead. The largest hidden cost of buying.
- Break-even year
- The year in which the buyer's wealth overtakes the renter's. Compare it against how long you will really stay.
- Section 24(b)
- Old-regime deduction for home loan interest — up to ₹2 lakh a year on a self-occupied property.
- Section 80C
- Old-regime deduction of up to ₹1.5 lakh covering loan principal, stamp duty, EPF, ELSS and more.
- Section 54
- Exempts capital gains on a house if the proceeds are reinvested in another residential property in time.
- LTCG
- Long-term capital gains. Taxed at 12.5% on property held beyond the qualifying period.
- HRA
- House Rent Allowance. Partly exempt in the old regime, worth nothing in the new one.
- Loan-to-value
- The share of the property price a lender will fund — usually up to 80% in India.
- Carpet area
- The usable floor area inside the walls. Always smaller than built-up or super built-up, and the only one you can stand on.
City prices, stamp duty rates and tax rules on this page match the engine powering the simulator above. Educational content only — not investment, tax or property advice. Prices and yields are indicative; verify locally before deciding.