First Time Home Buyers

Most people in India would love to have their own house. It's a dream come true.  The Government wants all citizens to have their own house and has launched an ambitious program called "Housing for all by 2022" Mission.If you're a first time home buyer, this might be the right time to buy your own house.

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First Time Home Buyers: Should you buy that house now?

Consider these factors when buying your first home.

1. Real Estate (Regulation and Development) Act (RERA)

The Government had launched RERA on 1^st May 2017, to bring transparency and fair practices in the real estate sector. Under RERA, developers of all residential and commercial projects, have to register themselves with a regulatory authority and get their registration number. Without registering the project, builders cannot advertise, market, book, sell or invite anyone to buy an apartment or a building in this project.

It is compulsory for developers to provide project details such as cost of land, cost of construction, development agreement, sanctioned plans, covered parking lots, construction deadlines and so on.Under RERA, the builder has to transfer 70% of the money received from a home buyer, to an escrow account. This money would be used as the stages of construction are approved by the engineers.

If the builder delays possession of the apartment within the agreed time period, he must return your (the buyers) entire amount with interest.

See Also: Should You Buy Under Construction Property In RERA Regime?

2. Property prices are falling

Developers used to hold the property as stock-in-trade, with the hope of an increase in property prices in the near future. To stop this practice, the income tax department has started imposing tax on such properties.

Those properties will be taxed at the rate of 8-12%, if they are in stock for more than one year from the date of receiving the project completion certificate. With the implementation of this practice, buyers can expect a further fall in the rates in the sector, which is already facing slow growth.

3. Tax benefits

First-time home buyers can claim income tax benefits under Section 80EE of the Income Tax Act.  If you are a first time home buyer, you can claim a deduction on home loan interest paid, up to Rs 50,000 a year under this Section. You can claim this deduction until your home loan is fully repaid. This deduction is over and above the Rs 2 Lakh deduction, under Section 24 of the Income Tax Act.

To claim this deduction the home buyer should meet the following criteria:

a) The home buyer should not have any other residential property in his name and the home loan should be sanctioned between 1^st April 2016 and 31^st March 2017. It would be good if the time period is extended further in the Union Budget 2018-19.

b) The value of the loan should not be more than Rs 35 Lakhs and the value of the property should not exceed Rs 50 Lakhs.

SEE ALSO: PMAY Gives You A Bigger Home

4.  Credit Linked Subsidy Scheme under PMAY

Credit Linked Subsidy Scheme (CLSS) for the Middle Income Group (MIG), was launched under Pradhan Mantri Awas Yojana (PMAY). Citizens with an annual income between Rs 6 Lakhs to Rs 12 Lakhs, come under the MIG-I category. Citizens under MIG-I category, get a 4% interest subsidy on a home loan up to Rs 9 Lakhs.

Citizens with an annual income between Rs 12 Lakhs to Rs 18 Lakhs come under the MIG- II  category. Citizens under MIG-II category, get a 3% interest subsidy on a home loan up to Rs 12 Lakhs.

This is an excellent time to buy your first house. Don't miss this opportunity. Be Wise, Get Rich.