Potential For Investors
Realty Sector Holds Potential For Investors
Good bargains, lower interest rates, and tax benefits make property a good investment avenue
Unlike earlier, investors in real estate today are in a dilemma when it comes to the question of where to put their funds. But even in the current scenario, there are opportunities for shrewd investors in real estate. Though the options are limited, the potential continues to
remain high.
A significant feature is that investors can leverage investments in real estate during exigencies as short-term financing is possible with many options. While investors in real estate can raise mortgage finance and loans against future rental income to meet any contingencies, those pursuing higher education abroad can liquidate and repatriate up to two residential units. With the annual repatriation limit up to $1 million per calendar year, NRIs and persons of Indian origin (PIO) can remit funds out of balances held in NRO accounts through authorised foreign exchange dealers. For those who have inherited property acquired out of rupee funds, repatriation is possible within the overall ceiling every year.
Home loan rates are down from 12.75 percent to 8.5 percent, depending on the repayment period. With keen competition brewing up in the housing finance sector, nationalised banks have suddenly become aggressive in promoting home loans through several sops. Home loans below Rs 20 lakhs have been classified under priority sector. One bank slashed the rate for one year to eight percent. This works out to a compensation of 1.75 percent in case of switchover, leading to an EMI saving of Rs 3,846 for a repayment period of 13 years. This will be applicable if a borrower has taken a loan of Rs 30 lakhs at 12 percent and has an outstanding loan of Rs 28.38 lakhs.
The interest rate reduction and dip in margin money have given a boost to the affordable housing segment. The downturn has, in fact, paved the way for the middle income groups to realise their dream of owning a home.
Many developers have lucrative offers for those who make upfront payments. This is because developers are keen to unload stocks and avoid debt liability by reducing their margins now. Moreover, need to raise working capital.
For investors, leased commercial properties offer 10-12 percent per annum. There will continue to be absorption of IT-related spaces from the telecom sector with new entrants hunting for space in select metros across the country, according to property consultants.
Investors need to target medium to long-term investments. Developed plots offer scope for price appreciation. An independent housing unit in the price range of Rs 50 lakh was unheard of in Bangalore a few years ago. Today, with the outskirts offering scope for BIAPPA approved sites in areas like Yelahanka and K R Puram, you can build units in the price range of Rs 38 lakhs and above, says R Balaji, CEO, Propmart.
In the case of a residential property investment, the fiscal sops make it lucrative. While one self-occupied unit is completely exempt from income tax and wealth tax, the second unit is exempt from wealth tax if it is leased for a minimum period of 300 days in a calendar year. For NRIs, rental income is freely repatriable subject to payment of applicable taxes. For investors in commercial property, there are tax benefits like wealth tax exemption.
Source: Times Property
Good bargains, lower interest rates, and tax benefits make property a good investment avenue
Unlike earlier, investors in real estate today are in a dilemma when it comes to the question of where to put their funds. But even in the current scenario, there are opportunities for shrewd investors in real estate. Though the options are limited, the potential continues to
remain high.
A significant feature is that investors can leverage investments in real estate during exigencies as short-term financing is possible with many options. While investors in real estate can raise mortgage finance and loans against future rental income to meet any contingencies, those pursuing higher education abroad can liquidate and repatriate up to two residential units. With the annual repatriation limit up to $1 million per calendar year, NRIs and persons of Indian origin (PIO) can remit funds out of balances held in NRO accounts through authorised foreign exchange dealers. For those who have inherited property acquired out of rupee funds, repatriation is possible within the overall ceiling every year.
Home loan rates are down from 12.75 percent to 8.5 percent, depending on the repayment period. With keen competition brewing up in the housing finance sector, nationalised banks have suddenly become aggressive in promoting home loans through several sops. Home loans below Rs 20 lakhs have been classified under priority sector. One bank slashed the rate for one year to eight percent. This works out to a compensation of 1.75 percent in case of switchover, leading to an EMI saving of Rs 3,846 for a repayment period of 13 years. This will be applicable if a borrower has taken a loan of Rs 30 lakhs at 12 percent and has an outstanding loan of Rs 28.38 lakhs.
The interest rate reduction and dip in margin money have given a boost to the affordable housing segment. The downturn has, in fact, paved the way for the middle income groups to realise their dream of owning a home.
Many developers have lucrative offers for those who make upfront payments. This is because developers are keen to unload stocks and avoid debt liability by reducing their margins now. Moreover, need to raise working capital.
For investors, leased commercial properties offer 10-12 percent per annum. There will continue to be absorption of IT-related spaces from the telecom sector with new entrants hunting for space in select metros across the country, according to property consultants.
Investors need to target medium to long-term investments. Developed plots offer scope for price appreciation. An independent housing unit in the price range of Rs 50 lakh was unheard of in Bangalore a few years ago. Today, with the outskirts offering scope for BIAPPA approved sites in areas like Yelahanka and K R Puram, you can build units in the price range of Rs 38 lakhs and above, says R Balaji, CEO, Propmart.
In the case of a residential property investment, the fiscal sops make it lucrative. While one self-occupied unit is completely exempt from income tax and wealth tax, the second unit is exempt from wealth tax if it is leased for a minimum period of 300 days in a calendar year. For NRIs, rental income is freely repatriable subject to payment of applicable taxes. For investors in commercial property, there are tax benefits like wealth tax exemption.
Source: Times Property