The probabilities of purchasing a ready-to-move-in property bring in a peace of mind, bearing in mind the tax benefit it provides on home loan as well as capital gains when you intend to sell it a few years later. On the contrary, under construction property is comparatively cheaper than that of ready-to-move-in property, but it has its own disadvantages.
A common question that forefronts most home buyers is whether one should go for a ready-to-move in-house or book an under-construction property. Questions say, why should one opt for a ready-to-move in-house against under-construction property worries most buyers. Factors like tax implication and financial implication accompany the decision of the property buyers.
- The decision of going for an under construction property comes with an inbuilt risk of negligence on the part of the real estate builders in handing over the possession as promised. A delay in handing over the possession from the builder’s end is a rule than an exception when it happens to under construction property. Though, opting for a ready-to-move-in property does not have that hazard.
- Investing your hard-earned savings in the form of EMI for a residential house is not advisable since putting your life saving to risk for a small variation will lead to excess investment. The best alternative would be to move into a ready-to-move-in property than an under construction one.
- A ready-to-move-in flat gives you one striking benefit – In case you intend to shift to a new home, you can save on rentals. Likewise, in case you are buying a property for investment purposes, the same can be let out, and your investment in the property can start generating immediate returns for you.
- Apart from the above-mentioned financial implications, there are income tax implications surrounding the decision of going for a ready to occupy property against an under construction one. Normally, people take home loans for the purpose to buy a property in India. The benefits of a home loan for a residential house are available only after the construction of the property is completed.
- When it comes to interest paid on a home loan for the years before the time you took possession, the income tax permits you to claim the same in five equal instalments. In the matter of a self-occupied property where the maximum amount of interest benefit usually is restricted to Rs. 2 Lakhs and in case the regular annual interest on your home loan is already more than Rs. 2 Lakhs, the benefit of amortisation of interest paid before completion of the construction is practically lost.
Benefits of Tax Implication
The benefit of 2 Lakhs for interest on home loan for the self-occupied property, is available only if the construction of property is completed within 3 years from the end of the financial year in which home loan was obtained. This means, if the construction of property is not completed within 3 years, your eligibility for a home loan interest will rapidly come down to 30,000 in case the same is used for your own residence. Income tax laws provide an exemption from capital gains resulting from a sale of property or any asset held for exceeding 36 months if you purchase a property or house within two years of such a transfer.
When it comes to repaying your home loan principal amount, you will receive a deduction of up to ₹ 1,50,000. Such a benefit is achievable only if you have taken possession of the property/house. Moving into a ready-to-move-in home will offer you more peace than going for an under-construction property.
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