Sec­ond home in­vest­ment re­duces tax bur­den

Accommodation Times - - .. Legal.. - By A.T. Bureau

The hous­ing in­dus­try is at­tract­ing to­wards in­vest­ing in sec­ond homes. Ac­cord­ing to the sev­eral re­ports says huge num­ber of salaried people as well as busi­ness­man. Due to global econ­omy slow­down in real es­tate mar­ket realty in­vestors have set sec­ond homes as their new tar­get for in­vest­ment in property mar­ket. Hun­dreds of real es­tate in­vestors are look­ing to in­vest in sec­ond homes to earn profit from this source, sources said.

On the other hand an­tic­i­pated ap­pre­ci­a­tion of the property there is an­other strong rea­son for this trend. It is the lu­cra­tive sav­ings on taxes that can be availed on the sec­ond home loan. One can avail a sec­ond home loan depend­ing on re­pay­ment ca­pa­bil­ity and then avail tax de­duc­tions on the in­ter­est be­ing re­paid on the sec­ond loan while con­tin­u­ing to en­joy the tax sav­ings on the prin­ci­pal as well in­ter­est of the first loan re­pay­ments. Tax Ex­emp­tion Pol­icy: Any buyer who avails a home loan for the pur­chase of res­i­den­tial unit is el­i­gi­ble for tax ex­emp­tion un­der Sec­tion 80C of the In­come Tax Act.

In such cases the amount re­paid to­wards the prin­ci­pal of the loan is ex­empt from tax­able in­come up to max­i­mum limit of R1 lakh per an­num. Sim­i­larly, the amount re­paid to­wards in­ter­est el­e­ment is ex­empted from tax­able in­come to a limit of R1.5 lakh per an­num.

In the case of a sec­ond home for which a loan is taken, there is no ex­emp­tion for re­pay­ments on the prin­ci­pal el­e­ment. How­ever in­ter­est paid on the sec­ond home loan is ex­empt from tax­able in­come and there is no up­per limit to the amount that can be ex­empt.

Whereas, the fol­low­ing points should be kept in mind while in­vest­ing in sec­ond homes:

•The area where a sec­ond home is lo­cated should show prom­ise of de­vel­op­ment in the near fu­ture.

•There should be good de­vel­op­ment in the sec­ond home scheme it­self.

•The property should be very well main­tained in or­der for it to be able to at­tract at­ten­tion of prospec­tive fu­ture buy­ers.

• The project should have good ameni­ties and con­ve­niences which can at­tract the in­ter­est of the buyer and make the in­vest­ment worth­while. Spe­cial em­pha­sis is laid on recre­ational ameni­ties, health re­lated ameni­ties and life­style.

•An at­trac­tion like a pop­u­lar restau­rant, spa, pic­nic spot, re­sort etc be­ing part of the project is an ideal sce­nario. These at­trac­tions en­sure foot falls in the project from out­siders, make businesses in the project vi­able and en­sures that a re­sale mar­ket is cre­ated as there will be de­mand for prop­er­ties for sure.

•The pres­ence of such at­trac­tions also en­sures that the sec­ond home project is well main­tained, kept clean and at­trac­tive.

•This en­sures that a re­sale mar­ket is cre­ated which en­sures liq­uid­ity which makes the in­vest­ment very lu­cra­tive and dy­namic in ones port­fo­lio.

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