Pros and Cons of buying a under-construction property
Is it beneficial to buy an under-construction property? a question that usually troubles almost all home buyers. Since UC property serve and suit different purpose and intent, it is imperative to know their pros and cons in details. Here is a ready guide to help you take the decision.
Advantages of?Under-Construction Property:
An under-construction property does not hurt a buyer’s pocket as much as a ready home does at the time of buying because of construction linked payment plan offered by builders. If factors such as location, area, property type and builder are same, a ready-to-move house costs more than an under-construction one. The difference in pricing can vary from anywhere between 10-25%.
Buying an under-construction property usually yields a higher return on investment due an extended window period between the buying stage and delivery timeline. If you sell the property at the time of OC (Occupation Certificate), you stand a good chance of earning a healthy appreciation on your capital investment.
Any property with Occupation Certificate as on 1 May, 2017(as per RERA), is mandated to be registered under their States’ RERA. Under-construction properties, therefore, will necessarily come under the ambit of RERA and thus, become liable to comply to fair trade practices. Buyers can avail information regarding these properties on their respective State’s RERA website and even seek speedy grievance redressal by the Appellate Tribunal formed under RERA.
领英推荐
Disadvantages of under-construction properties:
There is an element of risk involved when it comes to investing in an under-construction project. There have been cases when the builder has failed to deliver on time or in some severe cases, failed to deliver at all due to various reasons such as funding crunch, rise in the cost of construction materials and increase in lending rates, among others. It is, thus, imperative to do a detailed background check of the builder before investing in an under-construction project.
Purchasing an under-construction property will attract a tax incidence of five percent of the total cost of property. Stamp duty and registration charges will have to be paid separately, resulting in heavy expenditure on taxes. Affordable homes priced under Rs 45 lakh attract one percent GST of the total cost of property.?
Buyers usually finance their home purchase through loans, which are linked to certain tax benefits under section 24, 80EE and 80C of the Income Tax Act. The benefits under these sections are restricted to only ready-to-move-in properties, once the possession has been taken over by the buyer. The tax benefits on the interest paid during the construction of a property can be claimed in five equal instalments beginning from the year of possession.