Do’s and don’ts for buying a second home
February 21, 2018
Owning a home is on every family’s bucket list. However, buying a second home is like a cherry on the cake. You already have the experience of investing in real estate for the first-time so you can avoid all the novice mistakes you made. Nevertheless, there are a few do’s and don’ts to keep in mind while buying a second home and getting converted into a seasoned investor from a first-time home buyer. Read on to know more.
Have a clear purpose in mind
It is important to keep a clear perspective in mind while buying a second home. There is no doubt that buying a home is 2018 is the best investment option you can make, but it is also important to scan your finances and priorities before sealing the deal. Are you planning to stay in the property or let it out for rent? Do you have enough financial back-up to fund your down-payment? Also, if you are already paying an EMI for your first investment, can you afford another one? Most property buyers opt for a second home as an investment to reap long-term returns. Keeping this in mind, it is important to select a property that has a high appreciation value and resale rate.
Location is Key
As a seasoned investor in real estate, you must be familiar with the fact that location plays a huge role when it comes to buying a second home, or any property for that matter. Make sure the neighbourhood you invest in has a guaranteed appreciation rate and is not located in areas where the prices have already peaked. It is best to invest in outskirts that are developing as a result of a recent IT boom or is in a locality that will never fade out in the market like a beach-side property. If you are investing in your second home in order to have a place to head out to for leisure, opt for a pollution-free region that takes you away from the humdrum of monotonous city life.
The types of properties available
There are a plethora of types of properties available in the real estate market today. From secure gated communities and luxury villas to vacation homes and convertible houses, the list goes on. It is important to consider the type of property you are investing in whether you are buying it as in investment or second residence. When it comes to buying a second home, it is common to opt for a property that strikes the right balance between convenience, practicality and luxury.
Tax benefits you can enjoy
As per section 80C of the Income Tax Act, up to Rs 1 lakh of the principal amount repayment can be claimed as tax deduction for your new property. Additionally, Rs 1.5 lakh of the interest payable can be deducted in your taxes as per Section 24(b). However, these tax benefits are applicable only on your first property. While buying a second home, only the amount paid as interest is eligible for deduction without a maximum cap value. So, if you are paying an interest of 4 lakhs, the entire amount is eligible for tax deductions. This makes buying a second home extremely affordable and convenient for property investors. For more insights, make sure you go through our detailed blog on paying property tax in Chennai.
The responsibility of being a landlord
Though buying a second home has a multitude of benefits like a secure second income and a guaranteed retirement home for your later years, it also comes with the responsibility of handling tenants and regular maintenance. Whether you are subletting your apartment or renting the whole place out, prepare yourself for the process of selecting tenants, generating fool-proof rental agreements and setting up a uniform mode of payment for the renting period. It is also important to keep a close check on the property while it is on rent to make sure there are no cracks on the walls or leaking pipes that are not fixed.
It is a given that investment in real estate is a better option than other forms of investment and buying a second home is proof that you are headed in the right direction. It is also a good idea to opt for a credible builder as investing in a brand name matters the most in real estate. Head out to Casagrand today for luxurious developments in affordable prices.