India, Dec. 7 -- A home bought years ago may now be worth crores, but most buyers rarely calculate the true lifetime cost. stamp duty, maintenance, repairs, property tax, interest outgo, or compare it with the returns their money could have earned elsewhere. Homebuyers suffer from a common 'optical illusion' in real estate: looking only at the sale price versus the purchase price and calling the difference 'profit.' This is mathematically flawed because it ignores the cost of carry.

In 2010, Mira Singhal, 35, bought a 2BHK apartment in Goregaon for Rs.1.15 crore. Today, the flat is worth around 2.2-2.4 crore, a respectable jump, but not the 'doubling' many assume. When she added her actual costs, the numbers looked different. She paid ab...