Owning a home does not always mean that you have to live in it. Homeowners may decide to rent out their apartment while they live in another rented home. This choice can be made due to a variety of reasons, such as a change in jobs, relocation to another city, moving closer to family, or wanting to live in a neighbourhood that better suits their current lifestyle.
This option enables homeowners to keep their homes and collect rent while also being able to choose where they reside. But it also means paying rent even if you own a house and still have to take up the expenses and responsibilities of homeownership.
The arrangement can offer some homeowners financial and lifestyle flexibility. For others, the rent they receive may not cover the rent they pay elsewhere. Knowing these advantages and disadvantages can help homeowners determine if it is the right move for them to rent out their apartment while living on rent.
Why do homeowners rent out their apartment and live on rent?
There are several reasons why a homeowner may choose this arrangement. One common reason is relocation. A person may own a house in their hometown or an earlier place of employment but move to another city for work. Rather than leaving the property vacant, they may rent it out and use the rental income to offset some of their housing expenses in the new city.
Location can also be a factor. A homeowner may own an apartment in an area that is convenient for investment purposes but not for their current work, lifestyle or family needs. Renting a home closer to a workplace, school, public transport or family members may be more practical.
Some homeowners may also prefer renting because their housing requirements are temporary. For example, a person may expect to move cities again in a few years and may not want to purchase another property immediately. Renting can provide flexibility while allowing them to retain ownership of their existing apartment.
Another consideration is investment. Instead of selling an existing property to fund a new home, the owner may choose to retain the property as a long-term asset and generate rental income from it.
Pros of renting out your apartment and living on rent
There are several advantages of adopting this arrangement, such as:
1. You can earn rental income from your property
The most obvious benefit is the ability to generate rental income from an otherwise unused property. Instead of keeping the apartment vacant, the homeowner can lease it to a tenant and receive a regular income.
This income can be used towards the rent of the home where the owner currently lives, a home-loan EMI, maintenance expenses or other financial commitments.
However, rental income should not be treated as pure profit. Homeowners need to account for periods when the property may remain vacant, repairs, maintenance, property-related expenses and applicable taxes before determining the actual financial benefit.
2. You get greater flexibility in choosing where to live
One of the biggest advantages of renting is location flexibility. A homeowner does not have to remain in their owned apartment simply because they own it.
For instance, someone who owns a property on the outskirts of a city may prefer renting a smaller apartment closer to their workplace. Similarly, a family may rent a home in a neighbourhood with better access to schools, healthcare facilities, public transport or other amenities.
Renting can also make it easier to move when circumstances change. A job transfer, change in family requirements or preference for a different neighbourhood does not necessarily require the homeowner to sell their existing property.
3. You retain ownership of the property
Renting out the apartment allows the owner to continue holding the property instead of selling it to fund their current housing needs.
If the property is intended as a long-term investment, retaining ownership can allow the homeowner to benefit from any future appreciation in its market value. At the same time, the property can generate rental income during the period in which the owner is living elsewhere.
However, property appreciation is not guaranteed. Property values depend on factors such as location, infrastructure, demand, market conditions and the condition of the property.
4. You avoid buying another home immediately
Buying a second home involves a significant financial commitment. In addition to the purchase price, buyers may have to arrange a down payment and pay stamp duty, registration charges, taxes and other transaction-related costs.
Renting another property can provide a temporary or long-term alternative without requiring the homeowner to make another large investment.
This can be particularly relevant when the owner is unsure where they want to settle permanently. Instead of purchasing a property in a new city and potentially selling it later, they can rent while retaining their existing apartment.
5. You may be eligible for applicable tax benefits
Income from a rented property has tax implications, but homeowners may also be able to claim deductions available under the applicable income-tax provisions.
Depending on the individual’s circumstances and the prevailing tax regime, deductions relating to a let-out property and home-loan interest may be relevant. The treatment can differ based on factors such as the property, loan and taxpayer’s circumstances.
Therefore, homeowners should calculate their post-tax rental income rather than looking only at the monthly rent received. Those with substantial rental income or home loans may also consider consulting a tax professional before making a decision.
Cons of renting out your apartment and living on rent
Despite the advantages, there are also several drawbacks you should consider.
1. The rent received may not cover the rent you pay
The biggest drawback is that rental income and rental expenses may not match.
For example, suppose a homeowner receives ₹25,000 per month from their apartment but pays ₹40,000 to rent a home in another location. There is already a ₹15,000 monthly difference before considering maintenance, vacancy and other property-related expenses.
The comparison becomes even more important when the owned apartment is in a location where rental yields are relatively low, while the homeowner needs to rent in an expensive area.
Therefore, homeowners should compare the actual rental income with the rent they expect to pay rather than assuming that renting out the property will make their housing cost-free.
2. You continue to bear ownership costs
Renting out an apartment does not eliminate the costs associated with owning it.
Depending on the terms of the lease and the nature of the expense, the owner may have to pay for repairs, major maintenance, property taxes, society-related charges and other ownership expenses. A property may also require periodic spending between tenancies.
These costs can reduce the effective rental income. Homeowners should therefore calculate the annual cost of owning the property when evaluating whether renting it out makes financial sense.
3. Managing tenants can become an additional responsibility
Being a landlord involves more than collecting rent every month. Homeowners may need to find and screen tenants, prepare a rental agreement, coordinate repairs, respond to maintenance requests and manage the property when tenants move out.
This can become particularly difficult when the homeowner lives in another city.
Hiring a property manager can reduce the administrative burden, but this comes at an additional cost. Homeowners should factor this expense into their calculations if they do not want to manage the property themselves.
4. There may be periods without rental income
A rented apartment does not necessarily generate income throughout the year. There may be gaps between tenants, particularly if the property takes time to rent at the desired price.
During a vacancy, the homeowner continues to own the property and may still have to pay maintenance charges, loan EMIs and other expenses.
This means rental income should be estimated on a realistic annual basis rather than simply multiplying the monthly rent by 12.
5. You have less control over how the property is maintained
Tenants may not maintain an apartment in exactly the same way as its owner. Normal wear and tear is part of renting out a property, while certain damages may require repairs or deductions from the security deposit, depending on the rental agreement and applicable rules.
Homeowners living in another city may also find it difficult to inspect the property regularly. Clear documentation, tenant verification, a properly drafted rental agreement and periodic inspections, where appropriate, can help manage some of these concerns.
6. You remain exposed to property-market and rental risks
Owning a property does not guarantee either appreciation or a steady increase in rent. Local property markets can change, while rental demand can fluctuate based on employment opportunities, infrastructure, supply and tenant preferences.
A homeowner may also have to reduce the rent to attract tenants if market conditions change.
Therefore, the decision should not be based solely on expectations of rising property prices or rents. The current cash flow and the owner’s long-term plans should also be considered.
Renting out your apartment vs living in your own apartment: What should you consider?
The choice can be assessed across several factors:
| Factor | Rent out apartment and rent elsewhere | Live in your own apartment |
| Monthly cash flow | Rental income is received, but rent is paid elsewhere | No rent payment, but ownership costs continue |
| Location flexibility | Higher | Lower |
| Property ownership | Retained | Retained |
| Tenant management | Required | Not applicable |
| Maintenance | Owner remains responsible for applicable costs | Owner remains responsible |
| Upfront cost | No new property purchase required | No additional purchase required |
| Long-term flexibility | Generally higher | Depends on the property’s location |
There is no universal answer because the financial impact can vary significantly from one homeowner to another.
What should homeowners calculate before making the decision?
A simple cash-flow calculation can provide a starting point:
Rent received – vacancy allowance – ownership and maintenance costs – applicable taxes – rent paid elsewhere = approximate cash-flow impact
For example, if an apartment generates ₹30,000 per month in rent but the homeowner pays ₹35,000 in rent elsewhere, the immediate difference is ₹5,000 per month. The homeowner must then account for vacancy, maintenance and other applicable expenses.
The calculation should also consider the outstanding home loan, if any, and the owner’s longer-term plans for the property. Potential appreciation can be considered as part of the overall investment picture, but it should not be treated as guaranteed income.
Housing.com POV
Renting out an owned apartment while living in another rented home can offer a combination of rental income, property ownership and flexibility. It can be useful for homeowners who need to live in a different location without giving up their existing property.
At the same time, the arrangement comes with costs and responsibilities. The owner has to manage tenants, maintain the property, account for vacancies and continue paying applicable ownership expenses while also paying rent elsewhere.
The right approach is therefore to look beyond the simple comparison between rent received and rent paid. Homeowners should assess their complete cash flow, tax position, property-related expenses, location requirements and long-term housing plans before deciding whether to rent out their apartment and live on rent.
FAQs
Can I rent out my apartment and live in another rented house?
Yes, a homeowner can rent out their owned apartment and live in a different rented property. This can be useful when the owned home is in another city or does not suit the owner's current location, work or family requirements.
Is rental income from my apartment taxable in India?
Yes, rental income from a property is generally taxable under the applicable income-tax provisions. However, eligible deductions and the applicable tax regime can affect the amount of taxable income. Homeowners should check the current rules for their circumstances.
Can I claim a home-loan tax benefit if I rent out my apartment?
Tax treatment depends on factors such as the nature of the property, the home loan and the applicable income-tax regime. Certain deductions may be available for a let-out property, subject to prevailing tax provisions and applicable limits.
What if the rent I pay is higher than the rent I receive?
This creates a monthly cash-flow difference that the homeowner needs to fund. However, the decision should also consider factors such as property appreciation, flexibility, loan obligations, maintenance costs and the long-term purpose of retaining the owned apartment.
Should I rent out my apartment or live in it?
The decision depends on the homeowner's financial position, location requirements and long-term plans. Comparing expected rental income, rent paid elsewhere, ownership costs, taxes, loan commitments and lifestyle needs can help determine which arrangement is more suitable.
