Looking to rent an apartment? With a plethora of options at varying rates, one needs to get a steady about how much one should spare for rent from their salary. Here’s a mull over and few guidelines to follow, which should help manage one’s rental outgo without any hassle. Read on to find out more.
Understanding the Rental Market
When it comes to rental housing, one can’t help but be confused at all such offerings at different rates. As a result, any prospective tenant will fund it utmost challenging to gauge the amount of rent that needs to be spent out of their earnings. Market pundits and investment experts opine how one should never pay more than 30 percent of their earnings or salary towards rents and utilities put together. For instance, if your take-home rests at 60,000, you shouldn’t be paying any more than 18000 towards your monthly rent and other services. The first step is to determine the locality where you want to stay along with amenities and other facilities available, followed by security and accessibility of public commute to your place of work. After you have figured out the details, you will need to factor all these attributes in comparison to your earning before you can sign up on the agreement. One might land a good deal in a beautiful, well-to-do locality, but the commute to his workplace might incur a substantial expense. In such a case, it would be worthwhile to consider spending a bit more on renting a property that’s located close to your workplace. That way, you will still be able to save more and buy yourself a 2 BHK apartment from reputed builders in Kolkata.
In the past few years, the residential yield across metropolitan cities like Kolkata and all across the country have remained remarkably low to the tune of no more than 2-3 percent where individuals are reportedly spending as much as 40-50 percent of their monthly earning towards accommodation expenses. No matter how low the rental yields stand at, accommodation cost continues to be on the higher side, mostly in metro cities.
HRA and Rental Expense
HRA is an integral part of every individual who is a salaried person. Now, the Income Tax Act right under Section 10 (13A) permits one to claim and enjoy exemption on HRA if you are staying in a rented apartment subjected to lower of the following three conditions:
- The actual amount of HRA that one receives.
- Any rent that is paid over not more than 10 percent of your take-home salary that includes DA, Basic, and commission.
- For metro cities, you are subjected to fifty percent of your salary, whereas for non-metros forty percent.
No matter what your actual rent is, if any component is on the lower side, the same amount will be the maximum amount of exemption that is permitted. In case your rent payout varies mostly in comparison to your basic, you might choose to negotiate the am with your employer so that a salary reconstruction can be done so that your basic shows on the higher side.
How to go About Managing Rent on Account of Inadequate Salary
There are times when your monthly rent doesn’t exceed the stipulated amount for HRA to stand eligible for tax benefits. Although, the scenario is quite rare, given the high prices of real estate rent outs. Nevertheless, when such a situation occurs, it is necessary to strike a balance between your other monthly expenses. The first thing is to draw upon a budget so that you get a precise understanding of things on which you will be spending. Keep the thirty percent rule in mind whenever you are looking to rent out a property. Even better if you can lower it down to help save on your outflow by significant margins. This might call for having to compromise with other luxuries such as cutting down on eating out to save extra to be able to pay your rent and still keep a good amount.
List down your priorities and make amends to spend towards everything that you can’t possibly do without. The ideal approach would be to look for a 2BHK new flat from real estate developers in Kolkata that is less expensive and promises fewer amenities that can help you save money. This is easy if you are single, and you might not have to stay close to the happening places in town and can afford a little on the commute. However, always ensure that you choose to live in a secure area, as security is never a luxury but still a necessity. You might as well want to live in a shared space or invite a roommate to share the rent at your apartment.