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Buying a House

(Querist) 10 August 2009 This query is : Resolved 
Dear Sir,
I would like to know that is it better to buy a house with one's terminal benifits or seek an appropriate bank loan under following constraints:

Terminal Benifits 50 Lakhs
House cost 47 Lakhs
Individual in 30% tax bracket and will continue to be so for next 4 years.


Guest (Expert) 10 August 2009
It is prudent to go for loan due to the following reasons :-

(i) Terminal benefits are exempted for IT upto certain limits (like gratuity, P.F.);

(ii) An individual who is left with few years of service, can utilise his current pay certificate to show his re-paying capacity; (After retirement, he may not get loan of required amount as of now);

(iii) Housing loan re-payment can be a major tax-saver element;

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