Many home-seekers are skeptical about buying under-construction flats as the transaction comes with an element of
uncertainty. Ready-for- possession apartments, which do not pose such problems,
always command premium. However, carrying out the requisite due diligence and
taking some precautions could help you land in an attractive deal, mainly in
terms of the discount in price and certain other benefits.
For those buying a property from an investment perspective,
an under-construction flat could offer good returns. Such investors can
consider investing their money in a project when it has just been launched.
Many developers offer to take the soft launch route - where the project details
are circulated among a select few prospective buyers, with a discount on offer
- before making a public announcement.
The investor can sell the apartment to a third party and
benefit from the appreciation. The only point to bear in mind in such
transactions is that they are done on the basis of the allotment letter alone
the agreement is not registered and the stamp duty is not paid. However, it is
a perfectly legal transaction.
The other advantage of buying an under-construction property
is, obviously, the discounted price per sq.ft. The price of the property
increases in line with the stage of completion. If a developer has launched a
project before excavation, the discount could be in the region of 25%. It could
shrink to 20% once the which the construction is completed.
Pre-construction phase is defined as the period starting
from the date of borrowing and ending on March 31 immediately preceding the
year in which construction is completed. For instance, if you have taken a loan
in June 2008 and the construction is completed in May 2010, the period from
June 2008 to March 31, 2010 will be deemed to be the pre-construction period.
Now, let's assume the total loan amount is Rs. 40 lakh,
borrowed at the rate of 10% per annum. If the total interest payable for the
pre- period is Rs. 5 lakh, 20% of the amount - Rs. 1 lakh - can be added to the
interest component of each of the five years, starting from the year in which
the construction is completed. If your house is self-occupied, the deduction on
interest payable would be restricted to Rs.1,50,000 per financial year.
Also, it needs to be noted that deduction of repayment of
principal amount can be claimed under section 80C only from the financial year
in which construction is completed. While taking the decision on the purchase
of under construction flat, keep in mind the developments likely to take place
in and around the area, in terms of infrastructure projects as well as other
amenities like malls, schools and healthcare facilities expected to come up in
and around the area. Most important is to verify the track record, previous
performance of the promoter before entering into the agreement.
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