High inflation invest in property

Inflation is at high levels. Income on fixed income means like bonds and fixed deposits is not going to give good returns especially in the fixed deposit section, who have invested for less than 1 year are going to earn negative interest. Among the salaried class most of them invest in fixed deposits but seeing the present scenario investments in real estate seems to be safe and rewarding. It is being considered strong evade against inflation. Increase in inflation levels giving rise to uncertainties and house rents are also moving upwards, therefore it is a time you should think of having a roof over your head.

During the past few years, home loan rates were constantly moving slowly northwards. Adding to despair the steel and cement prices have also increased thus increasing the construction costs. But there are some indicators commonly pointing towards change for good in the coming time period. Some banks have already reduced their rates and others have lowered rates for their new customers.

Now the question arises seeing the present scenario is it the right time to invest in property?

There is competition among the banks to lure in maximum customers as there is very rare chance of home loan borrowers to default on their monthly commitments. Then flexible repayment options and lucrative loan packages are available to choose from which make the loans materialize affordable. Looking at the rising cost of renting in the cities makes more sense to invest in property and pay EMIs towards it. If you have a good credit record and have a stable regular income then getting a home loan is not a difficult task.

The salaried class people prefer to take home loan as tax benefits are associated with home loans such as the amount of EMI outflow is directly dependent on principal amount, rate of interest and loan tenure.

Let us see what the tax benefits attached to home loan. The greater the loan amount, the greater the EMI towards the loan. EMI can be divided into two components - the principal component and the interest component. In the beginning of the home loan tenure, the equated monthly installments will have a higher share of interest component. However, towards the end of the tenure the principal component will be high.

The principal repayment that borrowers make on their home loan is eligible for income deduction under Section 80C of the Income Tax Act. The limit under Section 80C is Rs 1 lakh.

U n d e r Section 24 of the Income Tax Act, the maximum amount of interest deductible from your taxable income is Rs 1.5 lakhs. As a result, your taxable income decreases by that amount. This limit is for self-occupied property only. Homeowners who invest in a second house can also claim benefits for interest repayment of the home loan. There is no limit on the interest repaid unlike the Rs 1.5 lakhs limit under Section 24 for self-occupied property.