Emotional Quotient of Home buying in India!

India- the land of emotions! From the big wide smile on a child’s face that spreads across the face when handed over a small piece of chocolate to the nostalgic feelings and sentiments of a man who steps out of the house to explore the world of opportunities for better living. Emotions surround each one of us and a storm of feelings explodes as we tend to feel some sense of belonging or attachment to any person or materialistic things associated with us.

However, when it comes to buying a property for ourselves and our family and dear ones, we become skeptical regarding the decisions we need to take while choosing the true reflection of our dream property. This perplex situation often puts us in a place where we need to choose between our aspirations and our affordability. If we think of a common man’s aspiration, just the fulfillment of the basic need for shelter is what he desires to have. Stepping into the shoes of the common man, we realize what a difference having a home of our own makes in his life in the society.

“I have been working as a tea vendor and have seen my father working day and night to save some money to have a small house of our own.” said Suhas. His face seemed dull and showed the failed attempts to buy a home for his family. Looking at the faces of the people who aspire to own a small home in the city, who speak about the failed attempts, feels no better. However, watching people working hard to realize their dream of having a property of their own, which they can refer to as a home of their own, is motivating!

Emotions carry us to a world of aspirations which gives us the hope to look forward to a day when we have them fulfilled. So all we need to do is never give up to realize your dreams as dreams do come true! 

New to property buying? Here are 5 things you must avoid in property buying

Buying a property is not a day to day job for all of us. When we plan to buy a property, we want to buy it once for all. None of us want to take risks in buying a property that is not worth the amount we pay, hence, we need to be careful while making a property purchase.

If you are new to the real estate industry and are planning to buy a home for yourself, then here are the common mistakes that you should avoid in order to complete the property buying procedure on a happy note without having to compromise on your basic requirements of your home.

1. Minimum Market Research: Market research is the first step of buying a property. If you fail in doing a proper market research, then the chances of acquiring a property that satisfies all your basic requirements are low. Before you step out to buy a property, you need to have sound knowledge about the basic terminologies that are used in the real estate industry and also the property price trends in the location you are willing to buy a property.
2. Relying on Agents for complete details: We often forget that the agent we are depending upon for a smooth property buying process, is not really working for us. The truth remains that the agent works for the seller and hence, you need to avoid complete dependency on agents. Rather, you can carry out a comparative property analysis of the properties in that particular area and in turn, reduce your dependency on the agents.
3. Having uncleared doubts: Having doubts regarding the property that you wish to buy should be avoided. You must get all your doubts cleared by asking questions that bother you anytime during the property buying process in order to avoid future legal hassles.
4. Searching without financial approval: This is another common mistake that you can commit. Having financial approval from a convenient financial institution plays a crucial role if you plan to take home loan for the property you will be buying. For this you must know how much you are willing to spend on property and accordingly get financial approval.
5. Extending Your Finances: We all set a budget for the property we plan to buy. But, at times, we do not find a suitable property to invest in that fits in our budget and hence, we extend our budget to some extent. At this point of time, we tend to exceed the budget beyond that might create problems in managing the money later.  

Have you asked him?

You!

Yes You!

Buying a property anytime soon?

Think of the moment when you have finalized on buying a property, you have so many questions to ask. But, when you go to meet the builder, you are run out of words. What would you prefer, ending up asking irrelevant questions or questions that will get you all the required details?

Unable to figure out where to start from?

Here are 10 important questions that you must have answers for while buying a property from the builder in order to avoid any legal hassles:

1. You can begin with asking the builder about the title clearance of the land on which the building is being constructed or is already built. Documents like Intimation of Disapproval and Commencement Certificate from the builder will make sure that the building is constructed on an undisputed land.
2. Find out the actual price of the property and also get clarity whether that price includes the cost of utilities like electricity and water, parking space, various taxes, legal charges and registration charges, etc. or not. This way you can avoid chances of the builder imposing some extra charges for any of these.
3. Must find out complete information about the super built-up area, built-up area and the carpet area. (These have been discussed in our previous post)
4. Enquire about the undivided share in the land which has to be registered before commencement of construction. It should be equally transferred to all the owners without retaining any share for him for later use.
5. Find out if the builder has any tie-ups with any of the financial institutions. This will help you ensure that you will be safe from fraud cases.
6. Always demand to have a look at the sample flat so as to check the quality of construction and the material used. Ask him for floor plans as well that can give you better idea about different layouts.
7. Enquire the tentative ready possession date from the builder that will help you know the time left for completion of the building construction.
8. Ask him about the various amenities and specifications, interiors like kitchen appliance or furniture that you will be getting post buying the property.
9. Request the builder/owner to provide an occupancy certificate that states that property is ready to be occupied. It will also be helpful for you in applying for home loan.
10. And lastly, the completion certificate that the builder must give while handing over the property to you. This states that the building is constructed according to the approved plan from the municipal authorities. 

Revising the basics of Property Buying

Property buying in realty market of a city like Pune is a challenging task. Understanding the insecurities that a new home buyer would have, today, we go back to the basics of the property buying process and the commonly used terminologies of the industry that the potential home buyers will come across.

Imagine you go to the shopping complex to buy clothes. You find a variety of clothes with many designs in different colors at the store. You like a particular dress design and you purchase it and return to home. And later, after a few weeks, you realize that the quality of the dress you purchased was not good and that disappoints you. This is due to lack of awareness and knowledge about the types of fabrics which led you to buying a dress of poor quality. Similarly, in the real estate industry, you must know the commonly used terms and their meanings so as to not get bluffed by the advertisers and agents and make an informed choice. 

The following are the commonly used terms in the real estate industry:

Carpet Area: This is the area that you actual usable space that you get inside the house. Carpet Area, literally, is the area that you would be paying for  while buying that property. The builder needs to quote rates for this carpet area and you must find out how much carpet area is available out of the built up area.

Built-up Area: The built-up area takes into account the thickness of the internal and outer walls and also the area of the balcony. This excludes the carpet area of the house.

Super built-up Area: Commonly known as the sale-able area, super built-up area is relevant to the multi-dwelling units and hence is one common term that you would get to hear too often. This includes the area that is available for common  use such as lobby, lifts, staircase, etc. At present, it would also include the swimming pools, gardens, clubhouse, and other similar amenities. This area is proportionally divided amongst the flats. The loading factor is derived here, which is applied to the carpet area in order to get the super built-up area or the sale-able area.

Hence, if you are planning to buy a home in near future, this is the homework that you need do before stepping out in search of properties that fulfill your requirements. 

For More Details 

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How to claim tax exemption on Loan Principal and Interest?

We all plan to purchase properties when we are financially sound to pay the home loan EMI. However, not many of us are aware of the tax benefits that we can claim out of the home loan that we apply for while we buy a property. In our previous posts we have discussed about how you can claim HRA and tax benefits if you have a home loan for the property you have just purchased.

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Today we are going to understand how you can claim tax exemption on loan principal and interest.

When it comes to tax breaks on the applied home loan, you are eligible to claim tax benefits only for the principal of the loan amount before the completion of your house. On the completion of your house, you are then eligible to claim tax benefits on the total interest paid till the date of completion of the house. In case where the house is let out, the entire interest paid on home loan can be deducted.

Tax Exemption on Loan Principal and Interest

The interest that is paid on a home loan is not deducted directly from the salary income for home loan. The calculation of income from house property is done for each house that the individual owns. A self employed person is eligible to avail tax benefit for the rent that he pays for his residence and can claim the deduction under section 80GG of Income Tax Act. Here, no HRA exemption is available in case of a self employed individual.

A tax payer can avail the following tax benefits on home loans:

1. If you have applied for a home loan and you want to repay the principal amount on home loan, then the principal amount will be deducted from gross total income. In case the house is let out, the deduction for the entire interest paid on home loan is available.
2. Tax benefit on interest payment. 
3. Additionally, interest paid on home loan during the pre-construction period, i.e., period prior to the financial year in which house is purchased or constructed can also be claimed as deduction. 

We shall discuss about how you can claim both, the HRA and the home loan tax benefits together in our upcoming post. Till then stay tuned!

Read More:

1. HRA and Tax Benefits from Home Loans?
2. Confused how home loans can get you Tax benefits?
3. Homes that are well connected!

HRA and Tax Benefits from Home Loans?

In our previous post, we had discussed about how you can avail HRA and tax can be exempted in your property. We shall now understand this with the help of the following example:

Consider an employee who resides in Mumbai. He pays rent of Rs. 20,000 per month and his salary is divided into the following components:

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• Basic pay: Rs. 50,000 per month
• Dearness Allowance or DA is Nil.
• HRA is Rs. 20,000 per month which is 40% of the Basic Pay

The exempted amount of HRA from the above mentioned details will be the least from these figures where HRA is Rs. 20,000, Rent above 10% of Basic= Rs. 15,000 (20000-5000) and 50% of the Basic Pay= Rs. 25, 000.

Out of these the least is that of the Rent above 10% of Basic i.e. Rs. 15,000. And hence, in this example, the person can avail HRA tax exemption of Rs. 15,000 per month out of the total HRA that is Rs. 20,000 per month.

Therefore, the net taxable portion of the HRA would only be Rs. 60,000 per year.

Net taxable portion of the HRA = Total HRA received per year – HRA tax exempted per year

It is important to note that the house rent allowance can be claimed if the following conditions are fulfilled:

• The person is an employee and is salaried
• He/she receives HRA as a part of his salary
• He/she is not a resident of the same city where he/she has his property
• He/she pays the rent of the house that he is staying in as a tenant and has a valid agreement of the same

The HRA tax exemption is done based on monthly or yearly basis depending upon whether the above mentioned clauses remain same throughout the year or vary during the year.

Read More:
1) Confused how home loans can get you Tax benefits?
2) Understanding EMI calculations
3) EMI: Evaluate, Manage and Impliment?

Confused how home loans can get you Tax benefits?

Naiknavare Developers - Pune

In a country like India, where the growing population is a major concern today, buying homes comes out to be an equally critical issue. Everybody desires to have a home of their own. In such a scenario, most of the people who are salaried employees depend upon the home loans for buying themselves their first house. However, not everyone knows how tax benefits can be claimed when they buy a property.

Quite often, questions like whether an income tax benefit can be obtained when you already possess multiple properties, out of which some are rented out, come up while a person is about to purchase a property and is thinking of applying for a home loan.

With a home loan you are entitled to pay a generous amount as an interest over a period of time which has dual benefits. We shall discuss a few points that would be helpful for you in availing the income tax benefits with more efficiency.

• House Rent Allowance (HRA) Exemption

If you have applied for a home loan for a property that you want to buy and you are staying in the property, then you are eligible to claim tax benefits on both, the principal and the interest of the home loan that you have applied for.

Regarding the actual HRA from the employer/ the company, according to section 10(13A) of Income Tax Act, 1961 read with rule 2A of Income Tax rules, you are exempted from tax with one of the following three conditions where the value considered for the actual HRA exemption will be the minimum value among the below mentioned figures:

• Actual HRA received
• Rent Paid in excess of 10% of salary (Basic + DA)
• 40% of salary (50% in case of metro city) where salary includes Basic + DA

Hence, it is important to have clear information about each of these so as to claim your HRA.  We shall understand this with the help of an example in our next post as the benefits do not end here. Stay tuned!