Possession Timeline (When Do you want Possession?)
Ready-to-move-in Property or an Under-construction property?
This is a doubt that sometimes troubles most home buyers, i.e. whether or not to go for a ready-to-move-in house or book an Under-Construction Property. Both these options are made to suit different purposes and intents. There is no wrong choice it is a personal requirement/need that determines what you choose.
We would highlight the pros and cons of both the options. This would be a helpful in assisting you to make the right choice for you.
Ready-to-move-in property
Ready-to-move-in property is readily available as their name suggests. You can move into the property as soon as you complete all the buying compliances
Due to the constant and frequent delays in delivery of many realty projects in the previous few years, home seekers have been more inclined to purchase Ready-to-move-in units. This helps the home buyers not take decisions outside their comfort zone.
Under-construction property
Under-construction property investments are the purchases that are made when the project/building is being constructed. A home purchaser needs to wait for the delivery of his unit for a certain period of time before receiving possession.
Buying your own property is a Dream of Most home buyers and one of the simplest ways to achieve this dream is Under-construction property purchase due to its lucrative pricing. But this has its own risks i.e. the foremost common risk of getting a delayed possession.
| Criteria | Ready-to-move-in Property | Under-Construction Property |
| Waiting Period | Immediate Availability
|
As per Possession Date
|
| Cost Factor | Comparatively Steeper Cost
If factors like location, area, property type and builder are same, a ready-to-move house costs Higher than an under-construction one. The difference in pricing can range around 15-30 %. |
Pocket friendly
Any under-construction unit doesn’t hurt a buyer’s pocket as compared to a ready to move in property does at the time of purchasing it. |
| GST Implication | NO GST
Ready properties, however, are disregarded for Goods and Services Tax (GST). |
GST is Applicable
Recently implemented and revised rate of Goods and Services Tax (GST) is 5% on Under- Construction properties. |
| Layout and Visual Aesthetics | You Inspect the Actual Unit
|
Promised Layout, Plans & Amenities
|
| Return on Investment | Comparatively Low Returns
Buying a Ready to move unit is involved with lower amounts of risk, hence a lower return as compared to Under Construction units. |
High Returns
Investors prefer buying an under-construction property that provides a cheaper deal in the under construction stage. If they sell the property closer to possession, they stand a great chance of earning a healthy appreciation on their capital investment. |
| RERA Compliance | RERA mildly/Doesn’t affect Ready Properties
|
RERA develops Trust in Buyers
|
| Quality and Age of Construction | It might have been in up for sale for a long time. Hence, if it has not been maintained properly, it might start looking old.
However, in case of a ready property, you cannot conduct any checks on the quality of construction like foundation strengths or material being used. |
Under-construction property ensures the buyer a brand new home.
In case of an under-construction property you have the option of evaluating the work progress on State’s RERA Website and strict RERA rules keep a check on the quality of construction. |
| Other TAX Implication | Buyers usually finance their home purchase through loans, which are linked to certain tax benefits under section 24, 80EE and 80C of the tax Act. the advantages under these sections are restricted to only ready-to-move-in properties, once the possession has been seized by the client. The tax benefits on the interest paid during the development of a property is claimed in five equal instalments beginning from the year of possession.
However, the tax exemption amounting up to Rs 2.5 lakh on the interest paid on a home loan for a self-occupied property is applicable only if the development gets completed and therefore the homeowner shifts within the house within three years of availing the house loan which works for Ready to move properties. |
In case the development doesn’t get completed within three years, tax benefits amounting only up to Rs 30,000 is claimed (not Rs 2.5 lakh). These conditions are applicable provided that the property occupied by the owner. In case, the owner decided to rent it out or leave it vacant (deemed let out), there’s no restriction on the number of interest deduction. As far because the tax exemption on the principle amount is taken into account, if the borrower finishes up paying the complete sum before possession, there’s no rule to assert back any reimbursement for the principle amount.
Since projects delays became so quite common nowadays, people who bring home loans on under-construction properties risk losing out on the account of tax benefits. |
