NEW DELHI: “You should never buy a house for investment or to save tax. If you have to make a purchase, make it a lifestyle decision. For investment, buy a land,” a senior personal finance expert told me almost 10 years back.
It made sense then. However, given tax rebate and policy changes in the last few years, many experts claim that investing in a home is not a bad idea now.
“Home price is almost stable, barring in a few pockets. Given the kind of incentives for affordable housing and with a tax rebate, this is the perfect time to invest in one. A major chunk of purchases in affordable housing are being done by investors,” said a senior marketing manager with Gaursons.
Budget 2019 has proposed to increase the deduction that can be claimed for interest paid on loans taken for affordable housing by Rs 1.5-3.5 lakh per annum for houses valued up to Rs 45 lakh. The deduction is available on loans taken up to March 31, 2020. This will provide a total benefit of `7 lakh over a loan period 15 years.
Also, earlier the capital gains from the selling of property were taxable. Now, one can also invest capital gains of up to Rs 2 crore arising from the sale of a house in two house properties. This goes in favour of buying a home for investment.
Experts claim that with so many piled-up inventories, buyers are in the best position to bargain. “Property prices have either corrected or remained at the same level over the past few years. The developers have little bargaining power. This has made houses affordable for many,” said Anuj Puri, chairman, Anarock Properties.
Additionally, the Reserve Bank of India has cut the Repo rates by 110 basis points this year to 5.40 per cent, a nine-year low. The RBI has recently made it mandatory for banks to shift to external benchmark-linked lending rates, which is expected to improve the transmission of rate cuts, which will make interest rate cheaper for homebuyers initially.