"Rent is money down the drain" has probably driven more Indian financial decisions than any other sentence — and it is an accounting error. Interest, maintenance, property tax and stamp duty are money down the same drain; only principal builds anything. Whether buying beats renting is a real question with a computable answer, and the answer swings on assumptions most people never state out loud.
The only fair comparison
The honest method compares terminal net worth on two fully-specified paths. The buyer's path counts everything: down payment, stamp duty and registration, the EMI, maintenance (about 1% of the home's value a year), property tax, and selling costs at the end. The renter's path counts rent, its annual escalation — and, crucially, investing every rupee the buyer sinks and the renter does not: the down payment and stamp duty on day one, plus each year's difference between ownership outgo and rent. Leave that investment leg out and buying always looks free; it is the mistake that settles most dinner-table versions of this argument. The rent vs buy calculator runs both paths this way.
Two inputs dominate the outcome:
- Property appreciation. The single most sensitive assumption. At high single digits, buying usually wins; at inflation-like appreciation, renting and investing usually does. Whoever picks this number picks the answer, so interrogate it — a city-wide average is not your building's future.
- Rental yield. In Indian metros, annual rent runs at roughly 2–4% of price — remarkably low by world standards. The rental yield calculator turns an asking price and rent into a yield; if the flat you would buy rents at 2.5%, you are choosing between paying 2.5% to occupy it and paying EMI-plus-costs to own it.
What the spreadsheet cannot hold
Two omissions are deliberate, one on each side. Owning carries security and optionality — no landlord can evict you, renovation is yours to decide — that never appear in a terminal value. Renting carries flexibility worth actual money to a career that may move cities. Price these yourself; just price them consciously, instead of letting "down the drain" do it for you.
Tax has switched sides quietly: home-loan relief under 24(b) and 80C is old regime only. Under the new regime — the default — a self-occupied buyer gets nothing, which alone flips many answers older calculators still show as favouring purchase. See choosing your tax regime.
Selling, one day
The exit has its own tax chapter: gains on property held over two years are long-term, with the rules rewritten in July 2024 — for older purchases the computation can still involve indexation, and reinvestment exemptions (s.54 and kin) can shelter gains rolled into another home. The property capital gains calculator handles the regimes and the CII arithmetic. Factor the 2% or so of selling costs the terminal value already charged you.
⚠️ Stamp duty varies by state, tax rules by Budget, and both change. The calculator's model — 1% maintenance, 2% selling costs, old-regime-only relief — is stated so you can argue with it. Verify current figures before a decision this size; WealthTicker is not a SEBI-registered investment adviser.
The listed way to hold the same underlying assets, without one illiquid flat, is in REITs and InvITs.
Key takeaway
Compare terminal net worth with the renter investing every rupee the buyer sinks — down payment, stamp duty and the yearly outgo gap — or you have not compared anything. The answer hinges on the appreciation you assume and the rental yield you actually face, home-loan tax relief no longer exists under the default regime, and both "rent is wasted" and "property always appreciates" are slogans, not analysis.
More in Module 11 — Money beyond funds: salary, tax, loans and property
Decoding your CTC: why in-hand is so much less
Cost to company is what employing you costs, not what you are paid. The four layers inside a CTC, where EPF and gratuity go, and what basic salary decides.
Old vs new tax regime: the choice that decides everything else
The new regime is the default and usually the winner — but not always. Where the break-even sits, and why the regime decides if ELSS, HRA and 80D matter.
Advance tax and TDS: how India collects before you file
TDS is a running prepayment, not the final bill; advance tax fills the gap in four dated instalments. The 15/45/75/100 calendar and the presumptive shortcut.
ESOPs, RSUs and ESPPs: taxed twice, at two different prices
Slab tax on the discount when shares become yours, capital gains from that day's FMV when you sell. Why tax can fall due on paper value, and the basis error.
Freelancing full-time: the 50% deal most professionals miss
Presumptive taxation lets a qualifying professional declare half of gross receipts as profit — no books, no audit. How it works, and how it compares to salary.
How an EMI actually works (and the flat-rate trick)
Interest on the outstanding balance first, principal with the rest — so early years repay very little. Why tenure sets total interest, and the flat-rate trap.
A surplus and a loan: prepay, refinance or invest?
Prepayment is a guaranteed, tax-free return equal to your loan rate — cut the tenure, not the EMI. When a balance transfer or investing the surplus beats it.
The small savings family: PPF, SSY, NSC, KVP, SCSS and kin
One sovereign family, priced quarterly. Which schemes compound, which pay income, which are tax-exempt — and why after-tax yield, not the poster rate, matters.
Insurance is not an investment: term plans and the LIC question
Bundled policies do both jobs badly. Sizing a term cover from needs, not folklore, and judging an endowment you own on forward numbers, not on premiums paid.
What trading actually costs: beyond zero brokerage
STT, exchange charges, GST, stamp duty and DP fees stack on every trade and no broker can waive them. The break-even move, and what leverage really multiplies.
Running a small business by the numbers
Break-even and margin of safety, margin versus markup, the cash conversion cycle, DSCR and GST as an input-credit chain — five checks that catch trouble early.
Section 80C: the whole ₹1.5 lakh menu, not just ELSS
A shared ceiling, not a product — and EPF, home-loan principal and tuition fees may already fill it. Count the headroom before you buy anything to fill it with.
Section 80D: two buckets, and the cash rule that voids most claims
₹25,000 for your family and another ₹25,000 for your parents, each rising to ₹50,000 at 60 — with the check-up allowance inside those limits.
HRA exemption: the least of three numbers, and which one binds
Actual HRA, rent minus 10% of basic, or 50/40% of basic — all keyed to basic salary rather than CTC, and all available only under the old regime.
Property capital gains: what actually changed when indexation went
Bought before 23 July 2024, a resident pays the lower of 12.5% flat and 20% indexed — but that relief caps the tax payable, not the gain itself.
Home loan eligibility: what a bank will lend is not what you can afford
FOIR caps total EMIs against income and subtracts existing loans in full; LTV caps the loan against the property. Neither asks what you can afford.
Education loans and Section 80E: the deduction with no ceiling
Uncapped on interest, but only for eight years from the year repayment starts — so the window, not the amount, is the constraint that should set your tenure.
From the blog
Rent vs buy calculator: what actually decides the answer
16 Oct 2026
At the defaults, a ₹1 crore flat leaves the buyer ₹3.08 crore behind the renter after 20 years. Which inputs flip the rent vs buy calculator, and what it omits.
Rental yield: what a flat really earns after costs and tax
10 Oct 2026
A ₹1.2 crore flat let at ₹30,000 a month yields 3% gross, 1.67% after costs and 1.14% after tax at the 30% slab. The line-by-line arithmetic.
TDS rate chart for FY 2026-27: salary, rent, fees and more
10 Oct 2026
TDS rates and thresholds for FY 2026-27 in one table: 10% on rent above ₹50,000 a month, 1% on contractors and property, 10% on dividends above ₹10,000.