Make the most of second home investment

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MAKE THE MOST OF SECOND
HOME INVESTMENT
Make the Most of Second Home Investment
December 12, 2017 fr Real Estate advantages of
buying property, commercial real estate india,
Home Investment, Most of Second Home Investment,
property website blog, Real estate blog, real
estate property blog, real estate property
website blog 1 Srishti Chandola
A huge number of second home buyers buy luxury
homes that provide them with the retreat away
from the city where they can rejuvenate and
relax. The increasing population of the high net
worth individuals (HNIs) has spurred the second
home demands. For some, second homes represent an
opportunity to pursue one's interests and hobbies
or a post-retirement recreation option the second
homes, however, are growingly viewed as on the
long-term investment option, with the capital
appreciation and rental income. The cement
changes in the tax laws, however, in the
financial year 2017-18 which have changed the
home buyers' outlook towards the investing in the
second homes. One prime reason is the deduction
of 2 lakhs, available on the home loan interest
is now similar for both, self-occupied and rented
property. Furthermore, the loss on the house
property can be reduced from the income from the
other sources which is confined to 2 lakhs only.
As a result of this, many salaried businessmen
and employees who sought the second homes so that
they could actually reduce the tax liability
which is now looking for the other means to earn
the returns? Should one buy a second home for the
rental income/investment? Most of the second home
investments range in the ticket size of Rs 40-80
lakhs with the homes in the premium segment.
Earlier, the buyers bought the property from the
investment point of view as well as kept the
homes vacant for the most part of the year. The
returns on investment came when the property
rates increased over the years. With the changing
times, however, a lot of people has begun giving
their homes for rent. While the capital value of
the second home will increase over time as it can
also generate the money in form of the rentals,
which now takes care of maintenance costs but it
adds to the savings of one's. This, moreover,
allows the investors to have the diversified
investment portfolio. The rental income certainly
yields on the housing property, is the typically
3 which
2
depends on the market and can go up to 5, if one
purchase under-construction property. This may
not be the sufficient reason to buy. Thus, one
can buy only when there is an exception to the
capital appreciation. Also, the new laws as well
as the policies which are brought in by the
government which has eased the complete process
for the buyers. With GST and RERA coming into the
picture, investing in the second homes for the
rental incomes with the increasingly become
trend. Factors that will impact the second home
investment Entry level rates and rental
yields The advantage of the second home will
certainly depend on the segments, the probability
and location of the renting out the unit. There
have been examples, where the renting happens
regularly as well as with the good amounts as the
rental. If the entry of rates, however, the cost
of unit buying is high, it certainly impacts the
return on the investment (ROI). Similarly, second
home buying in the location where the cost of the
unit is lesser may entail lower rentals and
lesser frequent renting. Thus, making the
intelligent decision while second home buying
unit, all about buying where the rate-points are
not very expensive, as well as rental incomes,
are. Most of the home buyers buy second homes
morally for the investment purposes or as the
holiday homes near the tourist places or earning
the rentals in the cities. In the previous case,
one should invest in second homes only if rental
returns are higher in the area. Income tax
laws The maximum deduction on the interest which
is now capped at 2 lakhs against the complete
interest that was pretty tax-free earlier, even
though there is a facility, it still will be a
loss-making venture for those trying to buy the
second home with the loans as the interest on
loans and on the rental incomes which will become
taxable. The smart way out would check ones
investment portfolio as well as plan ones
finances in the manner that permits the enjoyment
of advantages of second homes without making
losses or burning cash. Infrastructure
development Finding correct balance, however, may
not be easy especially when there are many
factors that can be affected rates as well as
property markets economy. Some of the factors
that should be considered are affordable pricing,
population growth, infrastructure development,
and location. Normally, high rentals can actually
be expected near corporate hubs and educational
zones. Purpose of buying home Most importantly,
buyers must be clear about the purpose of second
home buying. It is always a good idea to consult
ones family and friends as taking the final
decision. Primarily, identify some good places to
invest in. consider that the investment in
property that is located in the fastest
developing locality rather than the investing in
already developed place as the place that has
reached already its saturation which may not
provide the high-returns. What should you check,
before buying? Check credibility of the
builder Focus on the location,
infrastructure, unit size Check-out income
tax implications Ascertain cost of municipal
taxes and maintenance, payable on second home
Consider how to arrange for the finances, if the
first home is also taken on the loan?
How to Create a Home Library
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