Buying a home is a top priority for most middle-class families. In a city, the most preferred choices when it comes to a home are apartments followed by rowhouses and villas. When you decide to buy a home, you normally have the option to choose an under-construction apartment or a ready-to-move-in one.
What exactly is an under-construction apartment? An under-construction apartment is one which is not completed yet but is available for purchase. What are the benefits of buying an under-construction residential project? Read on to find out the seven benefits of buying an under-construction apartment.
Table of Contents
7 Benefits of Buying an Under-Construction Flat
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The Cost Factor
If you are not in a hurry to move into your home, choosing an under-construction home will be beneficial for you in terms of savings. The primary reason for this is the various offers that a developer puts forth during the launch phase. What is more, you can also avail early-bird or pre-launch discounts and other exciting benefits.
All these along with the appreciation factor will ensure that you save a substantial amount of money – 10% to 30% – when you buy an under-construction apartment. So, if you are planning to buy a home or enter the real estate market as an investor, the cost-effective way to do it is to buy an under-construction project.
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Flexible Payment Options
When you buy a ready-to-move-in property, you will have to pay the entire amount in one shot. However, an under-construction apartment offers great flexibility in terms of payment. If you are a homebuyer, you can pay an advance to book your home. As construction progresses, you can pay the remaining amount in installments.
The staggered payment method ensures that home ownership is more accessible and you won’t be left out to pay a massive sum of money. Even if you take a home loan, it is quite likely to be a lesser amount.
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Customisation and Personalisation
Your home is an extension of your personality. Hence, ideally, it should reflect your sense of aesthetics. When you buy a ready-to-move-in home, you cannot have a say in its layout or interior design even if you are willing to pay a premium for that.
On the contrary, an under-construction apartment allows you to give your future home a touch of customisation and personalisation. It lets you choose finishes, fixtures, and other customisation. As a result, you get a home that is personalised as per you and your family’s tastes and preferences.
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Appreciation and Growth
One of the key benefits of choosing a home which is under construction is its potential for tremendous growth and appreciation. Once the launch is announced, it will take 2 to 5 years, on average, for a project to get completed. By this time the surrounding areas where the project is located will see a lot of infrastructural development and growth.
Quite naturally, as an early investor, you can have all the benefits as the property will appreciate tremendously in the years to come.
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Latest Amenities and Advanced Technology
We are living in a world that is constantly being redefined by technology. As new technologies emerge, the housing sector also witnesses newer trends and amenities. When you opt for a ready-to-move-in property, you get features and amenities that are current.
However, when you choose an under-construction apartment, what awaits you are futuristic technologies. While smart home systems, energy-efficient designs, and advanced security measures are currently in use, they keep evolving. Ideally, if you choose a home that is being constructed, you can expect evolved technologies that will enhance the overall quality of your life.
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Legal Aspects and Validity
When buying a home, once the developer and location are finalised, the most important thing to check for is the legality of the property you are planning to buy. How does an under-construction apartment help you ensure that its titles are legally valid? The simple answer is RERA – the Real Estate (Regulation and Development) Act. As per the mandate by RERA, if the property has obtained an occupancy certificate by May 1, 2017, it must be registered under the RERA of the respective state.
In addition to this, registering with RERA is mandatory to obtain the necessary approvals from government. As a result, you can be sure of an under-construction project’s legal validity. What is more, you can check the details of the projects as well as their legal aspects on the RERA website of the state where the property is being constructed.
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Tax Benefits
When you buy an under-construction apartment, you get to enjoy a lot of advantages. But is there any tax benefit which you can avail of with your decision to buy a property which is still being constructed? Yes, indeed. As per Section 24 B of the Income Tax Act 1961, up to Rs. 2 lakh can be waived off per financial year on an under-construction home.
The same can be deducted from the home loan’s interest rate. Section 80 C of the Income Tax Act further waives off another Rs. 1.5 lakh, which can be deducted from the home loan’s principal amount. Another Rs. 50,000 can also be deducted as per 80EE of the Income Tax Act 1961, provided that the limit set as per Section 24 B has been reached.
Risk Factors and Ways to Avert them
So far, we have discussed in length the benefits of purchasing an under-construction apartment. But does it mean that such properties are devoid of risks? Absolutely not. If you are planning to buy an under-construction home, due diligence is advised. Make sure that you check all the documents related to the property with the help of a legal professional. Scrutinise* the purchase document carefully for any discrepancies. Never shy away from asking questions or seeking answers.
One of the major potential risks associated with an under-construction project is the chances of delay. The reason doesn’t necessarily be caused by the builder. For example, during Covid-19, construction activities around the globe were at a halt. Likewise, any natural calamity can also cause delays.
Finally, and most importantly, choosing a project from reputed builders such as SOBHA Limited can help you have immense peace of mind. When you plan to buy a home from a developer, analysing their track record over the years in delivering quality projects will help you understand their reputation. Accordingly, you can choose a home that suits your budget. This way you can ensure that the project you have chosen doesn’t get stalled due to financial or legal reasons and ensure that your hard-earned money remains safe.
Under-construction Apartment: The Advantages
As we are about to conclude, let’s take a look at the advantages of opting for an under-construction apartment.
First and foremost, choosing an under-construction property will let you save considerable amounts of money. Secondly, it comes with flexible payment options. You have the option of customising or personalising your space as per your tastes and preferences. As an investment, when you buy a property in the early stages, you can enjoy tremendous appreciation by the time it gets completed. Other benefits include tax benefits, clear titles, latest technology, and trending amenities, etc.
If you are planning to invest in real estate, choosing a property which is under construction helps you enter the real estate market in a cost-effective manner. Hence, it is highly advisable for real estate investors to pick projects that are under construction.
While you have reasons aplenty to choose an under-construction project, due diligence is critical. Make sure that you obtain all the documents related to the project and seek the expertise of a legal professional to ensure their veracity. This way, you can make sure that your money remains safe as the project you have chosen is legally valid.
FAQs
1. Is it good to invest in an under-construction property?
Investing in real estate is considered a great way to accumulate wealth. When venturing into real estate, the best and most cost-effective way to invest is to choose under-construction properties. There are many benefits to investing in an under-construction property including price – one can avail up to 30% discount in comparison with a completed project, tax benefits, and most importantly, the scope for tremendous appreciation are other benefits. Hence, investing in an under-construction property is considered good.
2. What are the tax benefits of investing in an under-construction property?
Investing in an under-construction property has many benefits. One of the most important ones among them are tax benefits. As per Section 24 B of the Income Tax Act 1961, up to Rs. 2 lakh can be waived off per financial year on an under-construction home. The same can be deducted from the home loan’s interest rate. Section 80 C of the Income Tax Act further waives off another Rs. 1.5 lakh, which can be deducted from the home loan’s principal amount. Another Rs. 50,000 can also be deducted as per 80EE of the Income Tax Act 1961, provided that the limit set as per Section 24 B has been reached.
3. Is it better to buy a ready-to-move-in home or an under-construction home?
When an individual or family decides to buy a home, there are two options for them – a ready-to-move-in home or an under-construction one. While the former has the advantage of immediate possession, for those who are ready to wait, an under-construction property is the right choice. Buying such a property will help them save money, get tax benefits, and enjoy tremendous appreciation.
4. How do I get an exemption from GST on an under-construction property?
While ready-to-move-in properties are exempted from GST, under-construction properties are expected to pay GST. However, you can reach an agreement with the developer to avoid GST on an under-construction property. This way, the developer will show your deposit as a loan. When the property gets completed, they obtain a completion certificate and return the loan with interest. This way, you can get a GST exemption on an under-construction property.
