Pby paramount IN GENERAL PROPERTY 2021-08-21
When it comes to investing, one has endless ways. One of the best investment options to consider is investing in property. Investing in a real estate property comes with numerous advantages that set it apart from other types of investments, such as stock investment. Below are the three benefits listed:
1) Numbers Don’t Lie: Let’s understand this with two cases.
Case 1 – Let’s assume that one rents a 3-BHK home and pays rent of 20,000 INR per month. This is way below the actual rental values in cities and other residential suburbs. And, let’s assume the average house rental value increases at 5% per annum. Again, this is way lower than norms.
Case 2 – Let’s assume that one buys a ready-to-move 3-BHK home for a cost of 30 lakhs. You take a home loan for twenty years at 8% interest rate.Where EMI will be around Rs 20,000.
As you can see, in this example, when you take a house on rent, you end up paying almost the same cost as owning a house. However, when you buy a home, you are building an asset that increases your wealth.
2) Freedom: While staying in a rented apartment the individual or the family has to follow certain regulations set by the landlord such as drilling holes, no entertaining guests at night, no house parties post 10 PM, no cooking of non-veg at home and the list is endless.However, purchasing a house gives them the liberty to live the life they want without the restrictions of the landlord.
3) Hedge against Inflation: The unexpected inflation rise in the economy can affect the cost of living for families/ individuals including the rise in the investment property prices.Due to inflation, the property investors can raise the amount they charge for rent, which becomes an additional burden for the tenants. The value of investment properties goes up to cover the rise in inflation.On being the owner of a house, the mortgage payment does not get affected by inflation since it is pre-decided at the time of agreement with the bank, i.e. the absolute value of the property decreases with inflation. This is a blessing in disguise for the owners that they don’t have to be beer the additional cost of paying the additional rent. Therefore, purchasing a property can provide you with additional property investment security during inflation.
4) PradhanMantriAwasYojana(PMAY): “Housing for All” Mission fort heurban area has been implemented with effect from 17.06.2015 to provide central assistance to implementing agencies. The Credit Linked Subsidy Scheme is being offered under this mission.
Criteria and Benefit:
For Middle Income Group (MIG) – 1
For Middle Income Group (MIG)– 2
5) Tax Benefits:One can claim a deduction on the principal loan repaymentof upto 1,50,000 INR under section 80C of the Income Tax Act, 1961. Moreover, they can earn from their investments in real estate in the form of long-term capital gains.If one sells the property aftertwo years, he/she can even be exempt* from income tax on long-term capital gains by investing in another property. Depends upon the price of the property.
After getting familiarized with the benefits, you are all charged up to go ahead with property investment. You can look out for major real estate trends and accordingly use your money in the wisest manner.