CALCULATION OF LOSS : REAL ESTATE

Property Value= Rs. 47,00,000.00
Loan amount = Rs. 40,00,000.00
EMI (approx) (a) = Rs. 42,000.00
Tax benefit per month (b) = Rs.10,080.00
Expected rent per month (c) = Rs.15,000.00
Effective payout per year (a-b-c)*12 = Rs. 2,03,040.00 (loss per year)
The property price will decrease by 20% in 1st year and remain flat for the next 2 years. Actually the worst case may be 30% depreciation. So the total loss over 3 years is
1.) Rs2 lakhs (above calculation) x 3 years = Rs 6 lakhs.
2.) Rs 70 thousand (loss of interest income due to down payment) x 3 years = Rs 2.5 lakhs.
3.) Capital depreciation by atleast 20% of Rs47 lakhs = Rs 9.5 lakhs.
Total loss in 3 years = 6 2.5 9.5 = Rs 18 lakhs !
Note : We have not calculated tax to be paid for House rent income from home.