One of the biggest financial dilemmas for urban Indians is deciding whether to keep renting or buy a home. Beyond affordability and lifestyle choices, tax benefits play a major role in this decision. With several tax rule changes in recent years, understanding the difference between renting and owning is essential.

This guide explains the tax benefits of renting vs owning in India (2025), real examples for salaried individuals, and how Owne’s Rent vs Buy Calculator helps you make smarter decisions.

Tax Benefits of Renting a Home

Renters can save tax under HRA or Section 80GG, depending on employment type.

1. HRA (House Rent Allowance)

Available to salaried individuals who receive HRA.

Exemption is the least of:

• Actual HRA received
• 40% of salary (50% for metros like Bangalore)
• Rent paid minus 10% of salary

Example:
Salary = ₹60,000/month (Basic + DA = ₹30,000)
Rent = ₹15,000/month
HRA received = ₹12,000

Exemption = least of:
• ₹12,000
• ₹15,000
• ₹9,000 (Rent – 10% of salary)

HRA exemption = ₹9,000/month = ₹1.08 lakh/year.

2. Section 80GG (for those without HRA)

Applicable if you do not receive HRA.

Deduction = Up to ₹5,000/month (₹60,000/year)

You must not own residential property in the same city.

Tax Benefits of Owning a Home

Owning a home provides multiple tax deductions under the Income Tax Act.

1. Section 24(b) – Interest on Home Loan

• Up to ₹2 lakh/year deduction for self-occupied homes
• Full interest deduction for rented homes

2. Section 80C – Principal + Stamp Duty

• Up to ₹1.5 lakh/year
• Stamp duty & registration charges are also eligible (only in the year of payment)

3. Section 80EE / 80EEA – First-Time Buyers

Additional deductions based on property value and loan amount.

4. Deduction on Municipal Taxes (For Let-Out Property)

Actual taxes paid can be deducted from rental income.

5. Capital Gains Benefits on Sale

Owners get favourable long-term capital gains (LTCG) treatment:

• 12.5% flat (no indexation), or
• 20% with indexation benefit

Exemptions under Sections 54, 54F, and 54EC can reduce or eliminate tax.

Tax Comparison: Renting vs Owning

Case: Renting

Salary: ₹12 lakh/year
Rent: ₹25,000/month
HRA exemption: ₹2.1 lakh/year
Tax saving: ~₹63,000/year

Case: Owning (Loan ₹60 lakh @ 9%)

Interest deduction: ₹2 lakh
Principal deduction: ₹1.2 lakh
Total deduction: ₹3.2 lakh
Tax saving: ~₹96,000/year

Owning provides higher tax savings, but also brings higher EMIs.

Which Option Is Better in 2025?

Renting is better when:

• You frequently move cities
• EMI exceeds 40% of your income
• Loan eligibility is challenging

Owning is better when:

• You plan to stay long-term
• You want wealth creation
• You can fully claim Section 24(b) + 80C benefits

How Owne Changes the Equation

Owne offers a middle path between renting and owning.

• Lower upfront cost
• Monthly payments build equity
• Tax benefits apply at final transfer of ownership
• Flexible exit options
• No heavy EMI pressure in the early years

This allows buyers to enjoy affordability today and tax benefits later.

Case Study: Buyer in Bangalore

Traditional Loan:
Upfront ₹20 lakh, EMI ₹58,000, tax savings ~₹96,000

Renting:
₹25,000/month, HRA benefits ~₹63,000, no ownership

Owne Route:
Entry fee ₹5 lakh, ₹35,000/month, equity growth + future tax benefits

Owne balances affordability with long-term ownership advantages.

FAQs

1. Can I claim both HRA and home loan benefits?
Yes. If you live on rent and own property in another city.

2. Do NRIs get tax benefits on property?
Yes, deductions mirror resident benefits. Rental income is subject to TDS.

3. Can I claim stamp duty every year?
No. Only in the year it is paid.

4. Are tax benefits available in the new tax regime?
No. Most benefits are only for taxpayers under the old regime.

5. How does Owne impact my tax benefits?
You claim tax benefits after final ownership transfer. Owne reduces EMI pressure beforehand.

Conclusion

In 2025, renting gives flexibility and HRA benefits, while owning provides greater tax deductions. But affordability, stability, and long-term goals matter just as much as tax savings.

Owne bridges the gap by offering:

• Lower upfront financial burden
• Gradual ownership through monthly contributions
• Future access to tax benefits
• No long-term EMI stress

Use Owne’s Rent vs Buy Calculator to compare both paths and make a more informed decision.