A homebuyer purchased an under-construction flat in Noida for ₹1 crore in 2020 and sold it for ₹1.8 crore five years later. At first glance, it appears to be an ₹80 lakh gain. An X user recently noted that while many people see the difference between the purchase and sale price as profit, the actual returns are far lower once all costs are taken into account.
Everyone said, “Wow! ₹80 lakh profit!”
But the actual numbers tell a different story, the X post said.
A flat bought for ₹1 crore and sold for ₹1.8 crore sounds like a real estate investment success story. On paper, the homeowner appears to have made an ₹80 lakh profit in just five years. Friends applaud the investment, social media celebrates the gain, and the transaction becomes another example of soaring property prices.
But beneath the headline number lies a different reality. Once GST, stamp duty, registration charges, brokerage, maintenance costs and taxes are factored in, the actual profit can shrink dramatically. A recent post on X reignited this debate, highlighting how many homebuyers mistake appreciation in property value for real returns, while overlooking the hidden costs of ownership that quietly eat into gains over the years.
According to the post, the buyer paid around ₹5 lakh in GST, ₹7 lakh in stamp duty and registration charges, and ₹3.6 lakh in brokerage. On selling the property, the capital gains tax of about ₹10 lakh further reduced the gains. After accounting for these expenses, the net profit worked out to roughly ₹54 lakh over five years, not ₹80 lakh.
Financial experts say such examples illustrate a common ‘optical illusion’ in real estate investing. Most homebuyers compare only the purchase price and sale price and treat the difference as profit, while overlooking the true cost of ownership. In reality, expenses such as GST, stamp duty, registration charges, maintenance fees, repairs, brokerage, property taxes and loan interest can significantly erode returns.
“A property may have appreciated substantially in value, but buyers often fail to calculate the lifetime cost of ownership or compare the returns with alternative investments,” experts said.
Consider another example. A buyer purchased a 2BHK apartment near Mumbai for ₹1.15 crore. Today, the property may be worth ₹2.2-2.4 crore. However, after factoring in approximately ₹18 lakh in stamp duty, registration, and brokerage, nearly ₹42 lakh in loan interest, around ₹28 lakh in maintenance costs, and about ₹12 lakh in repairs and upgrades, the total outflow exceeds ₹2 crore. The apparent gain looks far less impressive when viewed through the lens of total ownership costs.
Costs buyers should factor in before purchasing an apartment
1. The cost of a home loan
Financial experts advise buyers to evaluate the full cost of borrowing. A standard 20-year home loan at an interest rate of 8.5% can result in repayments that are nearly double the principal amount borrowed. If a property’s value rises at 5% annually while the borrowing cost remains at 8.5%, the owner may actually be losing wealth in real terms.
2. Maintenance charges
Monthly maintenance fees are often overlooked during the buying process. While a maintenance bill of ₹5,000 a month may appear manageable, it can become burdensome during periods of unemployment or after retirement. Buyers should assess the lifetime cost of recurring charges rather than focusing solely on the purchase price, financial experts said.
It is also important to note that GST applies to housing society maintenance charges when monthly maintenance exceeds ₹7,500 per member, and the society’s annual turnover exceeds ₹20 lakh. If both conditions are met, an 18% GST is levied on the entire maintenance amount.
3. Stamp duty and registration costs
Stamp duty and registration charges vary across states and can materially affect affordability. Since these costs are paid upfront and are generally non-recoverable, they increase the effective acquisition cost of the property and reduce overall returns.
4. Hidden charges
Buyers should carefully review all additional charges beyond the property’s base price. These may include development charges, approval fees, infrastructure levies, clubhouse memberships, parking fees and other amenity-related costs. In some cities, such expenses can add 8-10% to the final property price, say experts.
Affordability goes beyond EMI calculations
Financial planner Suresh Sadagopan said prospective homebuyers should look beyond their income and EMI eligibility before purchasing an expensive property.
“What are their commitments? Do they have children, or are they planning to have them? Do they really want to settle in this city, or could a future job change mean relocation?” Sadagopan said. “Buying a house is not just a financial decision; it is a lifestyle choice that reduces flexibility.”
He noted that even if a household has sufficient income to service a loan, expenses such as health and life insurance, travel, leisure spending and emergency savings can significantly reduce the amount available for EMIs. Buyers should therefore evaluate the total cost of ownership and their long-term financial stability before committing to a home purchase.
(Disclaimer: This report is based on user-generated content from social media. HT.com has not independently verified the claims and does not endorse them.)
