Preferred property options for first time buyers

There is a broad distinction between first time home buyers and second time buyers. First time buyers shall be making such a huge investment for the first time in their life which is why they invest a lot of time in researching the market. Unless extremely lucky, it may be the only asset of this scale, they purchase which is why they take into account every possible information before making a decision.

  

Studies have revealed that there are certain recurring traits among first time home buyers across different cities. Some of these recurring trends have been explored below:

First time buyers prefer purchasing apartments:

      Roughly 7 out of 10 first time buyers prefer purchasing an apartment over row houses or builder floors.

Apartments are cheaper and provide all the amenities that are needed to live a good life. Home buyers of Tier I and II cities prefer purchasing apartments mostly. Usually home buyers prefer buying 2 and 3 BHK properties.

         Preference for ready to move in properties over under construction ones:

This can be considered to be paradigm shifts in terms of the buyer’s psyche. Even some time ago, first time buyers preferred buying under construction properties because they were less expensive. However, most buyers prefer to buy ready properties because of delays in under construction ones. A lot of first time buyers also prefer to buy houses in communities which are under construction but offer possession within 2 years. Ready to move in properties offer rent saving and tax deduction up to Rs 2 lakhs per annum on the interest paid on home loans. The only issue with ready to move in properties is that they are more expensive compared to under construction ones. However, buyers are willing to go that extra mile.

       End usage is the dominant cause behind property purchase:

Usually first time buyers prefer to purchase an apartment for living in it rather than subletting it for rental income. First time buyers usually live in rented accommodations which they want to give up when they buy a property. Only a handful of first time buyers prefers to buy properties for subletting it to others or earning capital gains from it or tax benefits.

       Property purchase is for families rather than self-occupation:

First time buyers usually prefer to buy properties to live in with their families. They would rather buy apartments or houses with multiple rooms to accommodate the 3-5 members of the family. Only a handful of people prefer buying single room apartments for self-occupancy.

       Location and pricing are the two most important considerations for purchasing a property for first time buyers

Prime locations and budget are the two most essential points which are considered by first time buyers. Surveys have revealed that price is the top most consideration while locations came close second. Other parameters that a first time buyer must consider is connectivity to different areas via public transport, builder reputation, closeness to work, social amenities and size. Home buyers essentially look for properties in India which are closer to their preferred location, within limited budgets. It can be seen that over the past 10 years, that capital appreciation has been seen in areas which are well connected and close to prime locations more compared to other areas.

Want to Sell Your House? Know the Tax Implications!

The first budget proposed by the finance minister after the ascent of the new government at the center has had several changes in income tax laws with respect to capital gains accrued from the sale of property. The finance minister has capped the amount that can be saved from taxes through investment in capital gains of longer terms for sale of property in specific bonds, also termed as capital gains bonds. The finance minister has also specified that investment must be made on residential properties located in India for availing benefit of longer term capital gains.

According to current rules of income tax, capital gains in the long term accrued from property held for 3 years attracts 20% tax. Exemptions have been granted under specific conditions. However, some of the changes proposed for income tax laws seek to overturn a couple of these laws. Some of the changes proposed are as following.

Exemption of capital gains tax on housing property

According to current tax provisions, longer term capital gains that come about from a capital asset’s sale is exempted under Section 54/54F in case it is invested in construction or purchase of housing property, subject to specific conditions. For gaining exemption on capital gains, an assesse must purchase a new house one year below or 2 years post transfer of the original house. For the properties under construction, the construction must be completed within 3 years from the transfer date of the original property.

The finance minister has clarified now that investment for availing benefit of capital gains must be in residential housing property located in India and not abroad. The amendment shall apply for the assessment year of 2015-16 and following years.

Availing exemption on long term capital gains by investing in bonds

A lot of investors who sell off properties, save taxes on longer term capital gains through investment of capital gains amount in specific bonds, also known as capital gains bonds. Tax payers who wish to claim these exemptions from longer term capital gains must invest the sum in capital gains bonds within 6 months from the sale date or prior to filing of income tax returns, whichever comes earlier. The benefit can be availed from Section 54EC of Income Tax Act of 1961 till a capping amount of Rs 50 lakhs in a particular financial year.

The ministry of finance has clarified now that total exemption with respect to long term capital gains for investing in capital gains bonds would be limited to Rs 50 lakhs. The amendment shall be applicable for the assessment year of 2015-16.

Advance acquired for property sale and its forfeiture

The finance minister has proposed to levy taxes on advances received and forfeited later by individuals for sales of capital assets such as flats in case the transaction falls through. If negotiations do not translate into capital asset transfers and money charged as advance is forfeited by an assesse, then the sum shall be taxed in the assessment year under “income from other sources”. Under current provisions, the amount may be reduced from acquisition cost of an asset subsequently in the sale year of the capital asset when determining capital gains. This amendment shall also be applicable from 2015-16 and subsequent years. 

Transforming home buying experience

Home buying experience has been much simplified compared to what it used to be even a decade ago. No more do home seekers have to rely solely on brokers to locate the best properties within their budgets. Real estate websites provide a holistic solution to home seekers in netting their dream home within an affordable budget.

Real estate websites not only work as property consultants, advising you about the different profitable residential communities coming up within the city, but also accompany you for site visits and help you with the paper work. For instance, on IndiaHomes, more than 600 employees work collectively to make home buying a pleasant, fruitful and hassle free experience for home seekers.

As a buyer or investor, you should look for the parameters to choose the best property available within your preferred location(s), budget or specification(s). Consider the nearby projects, the profitability of investing in certain areas around the city and similar factors. Home buying may be a personal affair, but there is no harm in trying to find out the best value of your selected property. You can also participate in the discussions being held on several websites where people share their myriad home buying experiences. You could take a tip or two from their experiences to ensure that you get the best option.

To transform the experience of buying a property, you can register your name, mobile number and other details on the website. IndiaHomes provide a 5 minute call back facility to discuss your requirements. They will explain you the pros and cons of the residential community. Not only will they help you in selecting the right property, but also in getting your loan approved at the lowest possible interest rate with a feasible repayment plan.

Reputed real estate websites often give special offers on occasions. For instance, IndiaHomes offered to pay Rs. 1 Lac to select home buyers on completing 5 years in business. Recently, the company conducted a real estate sale for buyers to pick the best properties in India as per their budget. 

If you liked this, you may also like to read.

What’s bringing the investors to the Indian real estate market?

How & when should you start planning for buying a home?