Renting vs Buying A House: Which One Is Better & Why?
A good question indeed. I think the answer depends upon a number of factors. Who you are & how much is your income, age demographic location, citizenship status and life goals.
Sorry I do not wish to confuse you by stating so many parameters.
however I have strong arguments to present my case.
Case I : Mr A :The UK resident I know who has been in a job all his life. now he enjoys a decent pension and other social benefits.
He has been a travel buff and his pension is enough to cover the living expenses and pay the rent for his home.
His pension and other social benefits give him the assurance that he would be able to pay the rent and live in the home of his choice for all his life.
Case 2 : Mr B :A youth in India. He is an executive in a company a job which helps him cover his needs and save a little for his future.
He too lives in a rented flat and the salary covers the rent.
however once his retirement age comes there would be no pension form his employer and the country does not offer any social security system.
So how would he pay the rent for his flat when he gets no salary and no fixed source of income ?
So early in life he realizes the importance of Roti Kapda and Makaan
That he is to earn enough to manage his Roti that is Bread
Kapda : clothing to drape himself and
Makaan : A housing to provide a shelter for himself and his family.
Buying a house as part of Tax planning
Taking again with reference to Mr B Since he is in India he can buy a house by taking a loan from a bank or a financial institution.
One advantage of taking a housing loan is that you get to manage your taxes as the amount of loan you pay back can be used as a tax deduction and this lowers your tax liability.
So buying a loan can be a step that hits three birds with one stone
- One you are moving one step closer to living rent free and by the time you retire having your own own lowers your liability towards paying the rent.
- Maybe with some spare space a house can be used to rent out a room or part of the property thereby augmenting the income.
- There is a good amount of tax benefit one can get every year. This helps in lowering the tax you need to pay and at the same time you get to own an asset which would provide you shelter as well as as a potential mode of income.
Timing of buying a house is also important
Housing is a cyclic industry and post pandemic and the slow down are crumbling or about to get lower because the high inflation and job uncertainty and lack of disposable income may put more pressure on the real estate and the housing markets.
Thus one may get a good house at a great bargain price.
The jury is still out
The situation and opportunities differ from country to country and from person to person. So there is no one size fit all solution to the question.
I have stated my reasons to buy a house and you may have your reasons to prefer taking the house on rent.
For those not having a job being active on #hive and leofinance.io can help you blog and earn and get a side income which can help you pay for a house in the long run.
Please do share your views as a comment below
Thanks for reading my post.
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