WHY YOU MUST BUY A PROPERTY IN MARCH?
While buying a home is an emotional decision, it is a monetary investment too, which is why it is useful to understand the tax exemptions and other benefits of buying a property, and how one can leverage the same for properties they buy before the 31st of March.
Here are the reasons to consider:
HOME LOANS AND IT EXEMPTION:
A Home Loan principal amount is the original amount of money you borrow from the bank as a loan. Interest is the amount of money the bank charges on the principal of the amount loaned to you. The interest rate on a Home Loan is typically expressed as a percentage and calculated as the Home Loan interest.
One can claim Income Tax Exemption for both ‘principal’ & ‘interest’ components of the home loan, up to a total of Rs.3.5 lacs per annum.
CAPITAL GAINS AND TAX MINIMIZATION:
The term Capital Gains refers to the profit generated by the sale of a property or investment. Short-term Capital Gain refers to the profit made if the property is sold within 3 years of purchase. In the case of short-term capital gains, they are considered as income and accordingly taxed. Post 3 years, the profits are long-term capital gains that get taxed at 20%, after taking indexation into account.
Buying a property before 31st March in the current Financial Year, helps one save on the Capital Gains Tax, even if he hasn’t sold the original property yet, which he can do in the coming 12 months.
People are now finding it a worthwhile investment to buy property instead of having to pay rent as rental prices are increasing drastically, right up to a 25% increase. When the rental begins to exceed 4% of the Property cost of the home one is residing in, it may be the right time to consider buying your own home on a home loan.
HOME LOAN INTERESTS:
Although interest rates on home loans have increased by 1.5% over the last few months, the appreciation of property is between 15-30% YoY and the 8.5% home loan interest is the lowest amongst all types of loans available, including student loans. Hence, buying a property on a home loan is highly advisable, given it provides the additional benefit of IT tax exemption.
Hence, March would be the best time to buy the Dream Home, as builders further sweeten the deal with interesting offers.