 |
• Myths of Investing in Land
Myth No. 1. – Investment in land is meant only for millionaires.
Most people, when asked why they have not even considered investment in a plot of land, will immediately shrug and say, “I dot not have that kind of money to invest”. This is a complete myth. Even small investments (say between Rs. 5 lacs and Rs. 10 lacs) made on well-located land on the remote outskirts of a city may yield rich dividends if held for the long terms (10 years or so). Also, unlike earlier times, loans are available for buying land.
Myth-2 - Investing in land is extremely cumbersome, time consuming and expensive, both in terms of initial purchase as well as continued holding.
This problem is real. The title verification and registration process varied widely across the country. The best rule of thumb on deciding whether a developer is reputed or not is to check if the plot project is pre-approved by an leading nationalized or private sector bank. Also some reputed developers, in the interest of their clients make this process easier and faster, also they take care of their plots.
Myth No. 3 – No tax benefits are available I respect of repayment on a load taken to acquire a plot of land
At first sight this appears to be true. Unlike a load taken to acquire a house property, the interest payable on a load taken to obtain a plot is deductible for tax purposes only if the plot of land is used for generating income (for example by renting it out a open godown). The principal paid on such a load is, in case, not eligible for any tax benefits. However, the one thing that most people do not take into account is that the interest payable on such loans can be capitalized and added to the cost of acquisition. So while the load repayment may not give any immediate tax benefit, it helps in reducing he tax on capital on capital gain at the time of sale of land.
Most people, when asked why they have not even considered investment in a plot of land, will immediately shrug and say, “I dot not have that kind of money to invest”. This is a complete myth. Even small investments (say between Rs. 5 lacs and Rs. 10 lacs) made on well-located land on the remote outskirts of a city may yield rich dividends if held for the long terms (10 years or so). Also, unlike earlier times, loans are available for buying land.
Myth-2 - Investing in land is extremely cumbersome, time consuming and expensive, both in terms of initial purchase as well as continued holding.
This problem is real. The title verification and registration process varied widely across the country. The best rule of thumb on deciding whether a developer is reputed or not is to check if the plot project is pre-approved by an leading nationalized or private sector bank. Also some reputed developers, in the interest of their clients make this process easier and faster, also they take care of their plots.
Myth No. 3 – No tax benefits are available I respect of repayment on a load taken to acquire a plot of land
At first sight this appears to be true. Unlike a load taken to acquire a house property, the interest payable on a load taken to obtain a plot is deductible for tax purposes only if the plot of land is used for generating income (for example by renting it out a open godown). The principal paid on such a load is, in case, not eligible for any tax benefits. However, the one thing that most people do not take into account is that the interest payable on such loans can be capitalized and added to the cost of acquisition. So while the load repayment may not give any immediate tax benefit, it helps in reducing he tax on capital on capital gain at the time of sale of land.