Commercial Property Calculator — Rent vs Buy & Investment

Why the property uses XIRR. CAGR compares two numbers — money in at the start, money out at the end — which is right for a lump sum you never touch. Buying a home isn’t that: you pay EMI every month for years and collect rent alongside it. XIRR is the one annual rate at which all of those dated amounts discount back to zero, so it prices when each rupee moved and stays comparable with the CAGR figures above. Hover the 16.1% to see all 10 years of cash flow.

The property’s net gain is the same “Net gain if sold” figure as year 10 in the projection table below, and it is the undiscounted total of those same cash flows — so all three reconcile.

On tax. Every figure here is pre-tax. Sell after 24 months and the gain is long-term, taxed at 12.5% without indexation (a property bought today gets only this rate; the 20%-with-indexation option survives solely for purchases made before 23 July 2024). Sell sooner and the whole gain is added to your income at slab rates. Section 54 can reduce the tax to nil if you reinvest the gain in another residential house — but the window is 1 year before to 2 years after the sale (3 years to construct), not the same financial year, and anything not yet reinvested by your return-filing date must sit in a Capital Gains Account Scheme deposit meanwhile. The exemption covers the gain rather than the whole sale price, and is capped at ₹10 crore. Rent is treated separately: Rent is taxed as Income from House Property: take the annual rent, subtract a flat 30% standard deduction under Section 24(a) — no receipts needed — and subtract the home-loan interest under Section 24(b), which is uncapped on a let-out property. What remains is added to your income and taxed at your slab. A resulting loss offsets other income only up to ₹2 lakh a year, with the balance carried forward eight years. By contrast, listed equity and equity mutual funds held over 12 months are taxed at 12.5% under Section 112A, with the first ₹1.25 lakh of aggregate long-term gains each year exempt. Sold sooner, gains are short-term and taxed at 20% under Section 111A. This is the lightest treatment of the four options. Interest from fixed deposits and P2P lending is added to your income and taxed at your slab rate, which is what makes their headline rates flatter them most. This is general information for FY 2025-26, not tax advice — confirm your own position with a chartered accountant.