Invest Early and invest wise

Today the young yuppie working couples with handsome salaries are taking to real estate investment in a highway. For the younger age group, convenience is a lifestyle issue. So the gyms, day care facilities, buses all are taken care of within large housing complex. Today, the young working couples in their early and mid-twenties are actively investing in real estate. Younger, more financially fit families are looking at upgrades and moving into larger homes.

Cheap and easy availability of housing finance is also increasingly being attributes to this new trend. The EMIs vary depending on the loan amount and repayment term. For instance, an EMI for a loan of Rs, 1,00,000 at an interest rate of 7.5% for a tenure of 5 years would be Rs. 2004, 10 years Rs. 1187, 15 years Rs. 927 and 20 years Rs 806. In fact, a recent study shows that almost 80% of the young people have taken 15-20 year housing loans are pre-paying them within 5-6 years as increased prosperity means larges homes.

Several financiers offer free property insurance. In any case, even if you were to take insurance the premium charges are far lesser at a younger age. At the age of 30 for a 15 year term and an assured sum of Rs. 15 Lakh, you would have to pay a yearly premium of Rs. 76,000 whereas if you were 40, the premium would have been Rs. 82000.

Tax Benefits

Arguably the most important factor that drives youngsters towards investment in real estate is the tax benefits that accrue.
Self-lease is where the employer leases the house belonging to the employee and it is allotted to employee as rent-free accommodation, to claim the benefit of enhanced deduction towards interest on loan borrowed for construction or purchase.

However, in such cases, perquisite value of rent-free accommodation is taxed in the hands of the employee. In case of working couples, both of them individually can claim the benefit of deduction of interest under section 24 provided the house is in the joint name of the couple and the interest is taken in the joint name and repayment is also made by both of them. On similar lines, they can enjoy even rebate under section 88 towards principal payment.

In any case, it makes a world of sense to invest in real estate early.