Rent or buy is the biggest financial fork most Indian households stand at, and it is usually argued with slogans — "renting is throwing money away", "buying is forced savings". Both slogans dodge the two numbers that actually decide the outcome: the rent yield on the flat you want (annual rent divided by its price) and how long you will stay. This guide works both sides of the ledger with one worked example, states every assumption, and shows where the lines cross.
The full worked table behind the chart
Every figure the sketch compresses, year by year. Buyer equity = property value (5% appreciation) minus loan balance. Renter corpus = ₹26 lakh invested at 10% with the monthly cash difference (EMI − rent − maintenance) added — negative from year nine, when rent crosses the EMI.
View the numbers as a table
| Year | Property | Loan left | Buyer equity | Renter corpus | Rent/mo |
|---|---|---|---|---|---|
| 1 | ₹1.05 Cr | ₹78.4 L | ₹26.7 L | ₹32.5 L | ₹37,530 |
| 5 | ₹1.28 Cr | ₹70.5 L | ₹57.8 L | ₹61.9 L | ₹49,617 |
| 9 | ₹1.57 Cr | ₹59.4 L | ₹97.3 L | ₹97.0 L | ₹65,596 |
| 10 | ₹1.65 Cr | ₹56.0 L | ₹108.7 L | ₹106.6 L | ₹70,338 |
| 15 | ₹2.11 Cr | ₹33.8 L | ₹177.5 L | ₹159.6 L | ₹99,713 |
| 20 | ₹2.71 Cr | ₹0 | ₹271.3 L | ₹217.7 L | ₹1,41,356 |
Illustration only. The renter's 10% return is pre-tax and the buyer's exit costs and LTCG are not modelled — see the article for what each side leaves out.
What does each option cost in month one?
Take a ₹1 crore flat that rents for ₹35,000 a month. That is a gross rental yield of 4.2% — above the 2.5–3.5% typical of Indian metros, which makes this example generous to buying. Buying it with 20% down (₹20 lakh) and a ₹80 lakh loan at 8.5% for 20 years costs an EMI of ₹69,426 a month (close to SBI's published 8.45% home-loan rate in October 2026; reproduce the arithmetic on our EMI calculator). Renting the same flat costs ₹35,000, plus maintenance if the owner passes it on. The buyer also pays stamp duty and registration — about 6% here, ₹6 lakh — on day one. The renter does not.
What happened to the tax advantages?
They mostly left with the default new regime. Under Section 115BAC the Income Tax Department's own FAQ confirms that a salaried filer on the new regime gets no HRA exemption, no Section 24(b) interest deduction on a self-occupied home, and no 80C on principal repayment. So for most salaried readers the rent-versus-buy comparison is now a plain after-tax cashflow comparison. The old tax shields still exist — but only if you file under the old regime, and only against the old regime's higher rates. Run your own split on our tax hub before assuming the loan interest "saves" you anything.
Where does the renter's money go?
The renter starts ₹26 lakh ahead (the down payment plus stamp duty the buyer paid) and invests it — say 10% a year in equity, pre-tax, illustrative. Each month the renter also invests the cash difference: EMI minus rent minus maintenance. Early on that difference is large (about ₹31,000 a month in year one); as rent grows 7% a year it shrinks, and around year eight the rent crosses the EMI — from then on the renter is drawing the difference back out of the corpus. That late-year drag is the strongest honest argument for buying, and the worked table shows it explicitly instead of hiding it.
When does buying catch up?
Here is the full worked table for the example: the buyer's equity (property value minus outstanding loan, at 5% a-year appreciation) against the renter's invested corpus.
The two lines cross in year nine. For the first eight years the renter is ahead — the ₹26 lakh and the monthly difference compound faster than the buyer's equity builds. From year nine the buyer's equity pulls ahead and ends twenty years at ₹2.71 crore against the renter's ₹2.18 crore. Every figure here is an assumption you can disagree with; the SIP mechanics behind the renter's corpus are the same ones that drive a monthly investment plan.
The two corpus lines, and the year they cross
Buyer's equity is property value minus the outstanding loan (5% a-year appreciation). Renter's corpus is the ₹26 lakh the buyer paid upfront, invested at 10%, plus or minus the monthly cash difference between EMI and rent. The lines cross in year nine — that crossing, not the year-twenty endpoint, is what a rent-versus-buy decision actually turns on.
Scroll the chart sideways to see every year →
Illustration only, computed from the assumptions stated in the article: ₹1 crore flat, ₹35,000 rent growing 7% a year, ₹80 lakh loan at 8.5% for 20 years, 6% stamp duty, ₹3,000 maintenance. Not a market view; change an assumption and the crossing moves.
Which assumption moves the answer most?
Property appreciation. Rerun the same twenty years with 3% appreciation and the renter finishes ahead by about ₹36 lakh; with 7% the buyer finishes ahead by about ₹186 lakh. Nothing else comes close: the rent-growth rate, the investment return and the EMI rate all move the answer, but the appreciation assumption swings it by lakhs. Anyone quoting a confident rent-versus-buy verdict without stating their appreciation assumption is guessing. The second lever is tenure: if you sell within a few years, stamp duty plus exit costs plus a short runway make buying very hard to win.
The advantages and disadvantages, plainly
- Buying — advantages: your housing cost is fixed at the EMI while rent inflates; leverage amplifies any appreciation (that is also the risk); it is forced saving; you can modify, sublet and pass it on; no landlord can end your tenancy.
- Buying — disadvantages: ₹26 lakh of entry costs before a brick is yours (stamp duty here alone is ₹6 lakh); ₹86 lakh of interest over the loan in this example; concentration — one street, one city, one asset; selling is slow and taxed at 12.5% LTCG without indexation for property sold after 23 July 2024; maintenance and society charges never stop.
- Renting — advantages: mobility for jobs and life changes; your capital stays diversified and liquid; the monthly cost starts at half the EMI in this example; no maintenance, no exit tax, no concentration.
- Renting — disadvantages: rent inflates faster than most salaries (7% here doubles it by year eleven); eviction and landlord risk; Indian rentals under-supply family homes; and the system needs discipline — the renter only wins if the difference actually gets invested, every month, for years.
The entry cost: stamp duty and registration
Stamp duty and registration together run roughly 4.5–8% of the property value depending on state, gender and city surcharges — in this example 6%, or ₹6 lakh that earns nothing back. Karnataka, for instance, charges 5% duty on apartments above the slab threshold plus 1% registration; Delhi 6% for men and 4% for women; Maharashtra 6% plus a metro cess with registration capped at ₹30,000. Rates change and slabs differ by state — always check your state's Inspector-General of Registration (IGR) page before you budget. The table below the article lists the common states.
Stamp duty and registration, common states
Indicative 2026 rates from two independent aggregators, cross-checked where an official page was reachable. Slab boundaries and city surcharges differ within states — always confirm on your state's Inspector-General of Registration page before budgeting.
View the numbers as a table
| State (metro) | Stamp duty | Registration |
|---|---|---|
| Maharashtra (Mumbai) | 6% (men) / 5% (women) + metro cess | 1%, capped ₹30,000 above ₹30 lakh |
| Delhi | 6% (men) / 4% (women) | 1% |
| Karnataka (Bengaluru) | 5% on larger apartments (2–3% slabs below) | 1% |
| Tamil Nadu (Chennai) | 7% | 1% |
| Telangana (Hyderabad) | 4% | 0.5% |
| Uttar Pradesh | 7% (men) / 6% (women) | 1% |
| Kerala | 8% | 2% |
Rates change; several states charge women less. Karnataka's slab boundary (35 vs 45 lakh) differs between sources — the table shows the large-apartment rate.
A decision checklist, not a verdict
- Work the rent yield first: annual rent divided by price. Below about 3%, you are paying a lot for the option of owning that specific flat.
- Decide your honest tenure. Under five years, transaction costs usually settle it; past ten, the fixed-EMI-vs-rising-rent effect starts to dominate.
- State your appreciation assumption out loud. It moves the answer by lakhs.
- Only count tax shields you will actually claim, under the regime you will actually file.
- If you rent, the plan only works if the difference is invested mechanically — a SIP set up the month you sign the lease.
- If you buy, stress-test the EMI against a job gap, and keep an emergency fund outside the down payment.
Educational content, not financial advice. Figures are a worked illustration with stated assumptions, not a market view. Sources: Income Tax Department new-regime FAQ (incometax.gov.in, fetched 29 Oct 2026) for HRA/24(b)/80C exclusions; state registration department pages and two independent rate aggregators for stamp duty ranges; SBI/ICICI/HDFC published home-loan rates (Oct 2026); the break-even table is computed from the assumptions stated in the text.