Investment. It’s a buzzword that has been grabbing everyone’s attention. From individuals to big corporate companies and even governments; everyone is seeking profitable investments. And while the options for an individual vary from stocks to mutual funds, and these days, even bitcoins; real estate continues to be the smartest investment tool. Why? Well, read on.
1. Tax Benefits – Remember the constant battle to save as much as possible in tax, every financial year? Well, investing in a home is the easiest way to earn tax benefits. All you need to do is avail a home loan, which not only eases the pressure on your pocket but promises rebate on income tax. A very important criterion to be kept in mind while taking a Home Loan is the Tax Benefit on Home Loan. To explain the Tax Benefit on Home Loan, the Repayment of Home Loan is divided into 2 components:-
- Repayment of the Principal Amount
- Repayment of the Interest on Home Loan
The amount paid as Repayment of Principal Amount of Home Loan by an Individual/HUF is allowed as tax deduction under Section 80C of the Income Tax Act. The maximum tax deduction allowed under Section 80C is Rs. 1,50,000.
Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24 of the Income Tax Act. As per Section 24, the Income from House Property shall be reduced by the amount of Interest paid on Loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of Property. Section 80EE provides for additional Deduction of Rs. 50,000 for Interest on Home Loan. This incentive would be over and above the tax deduction of Rs. 2,00,000 under Section 24 and Rs. 1,50,000 under Section 80C.
- Passive Income – Imagine this. You spend on something which in turn becomes a source of income for you. Yes, with real estate, it is possible. In fact, it’s a reality. Passive income is money you earn without doing actual labour. In the real estate market, one of best ways to generate passive income is by investing in turnkey rental properties that are ready to rent. When you have several rental income properties, you make your money two ways. The most obvious is the revenue stream created by rental income. The other way you can profit is by increasing the value of a turnkey rental property and mining the equity that you build. The rentals from a property you own promises a continuous source of income, which will keep rising. In recent times, the homes near the IT hubs of Pune have witnessed a significant rise in the rental income. And while these rentals depend on the size of the home and its location, it is a form of income which is uninterrupted.
- Appreciation – Yes, the real estate market went through tough times recently. And yet, the ones who have stayed invested in it for a longer duration have earned good ROI. As time passes, the value of a property is bound to increase, whether the house investor forces real estate appreciation through repairs/renovations or simply holds on to the investment property. Real estate appreciation allows a house investor to get a great return on investment upon selling, and little work may be involved in the process.So, just like any other investment tool, stay invested in real estate and property appreciation is guaranteed. Pune, the city that has recently topped the charts for Ease of Living in India, has witnessed steady rise in property prices.