Almost every individual in India dreams to own a beautiful home away from the bustling of the city. Post the coronavirus-induced lockdowns, the need of owning a second home has grown more than ever before. Thus, it is inspiring everyone to invest in a holiday home. In this New Normal, the most common buyers of such homes are youngsters. Due to the cost of traveling and other factors, the millennials prefer to own a holiday home. Moreover, the concept is increasingly gaining momentum among other selected buyers – mainly HNIS, NRIS and the upper-middle class individuals.
While the idea of purchasing a holiday home at a prominent location in India is quite enticing, you should always be careful before investing your hard-earned money into a property. Prior to book a holiday villa for yourself, you need to figure out a few things. Else, you could land yourself into a big trouble because a holiday home is an expensive possession.
Here are some of the important things you should consider before buying a holiday home:
1. Financial Goals
When you plan to invest in a second home or a holiday home, make sure that your financial goals are aligned appropriately to prevent any negative impact on your savings. Before choosing a property, it is important to gauge the estimated Returns on Investment (ROI) so that you can plan your financial portfolio and earn a steady additional income as well. Further, do not spend more than 30% of your income as an initial investment in the property.
2. Choose a property in vicinity
Although there may be several lucrative holiday home options far away from your house, invest in a property that you can reach in 4-5 hours drive. In this way, you can easily keep a check on your residence and even plan sudden weekend getaways to spend quality time with your loved ones. Additionally, buying a vacation home at an accessible location which has excellent connectivity can prove to be prudent.
3. Make it a source of income
Holiday homes are not just a symbol of luxury, you can also generate rental income from them. If you buy a second home at a famous tourist destination in India, you can earn a good amount of extra income by renting it out. Destinations like Rishikesh, Mussoorie, Shimla, Nainital, Goa and other popular tourist spots are best to purchase a vacation home.
4. Take help from experts
In the modern era, you can get everything online. Even when it comes to real estate, most of the buyers prefer to search and finalise a property through mobile only. But buying a real estate asset via mobile phone or laptop is far more different from the actual process. In reality, you might need external help from real estate agents to understand the neighbourhood and tax implications to strike the deal. Hence, it is advisable to work with an expert while buying a property in India.
5. Know the taxes involved
Don’t be under the impression that because it’s a holiday home, you can get a tax holiday as well. Second homes have various tax implications. As stamp duty and property registration charges vary in different states, it is recommended to have a fair idea in advance about how much you will be shelling out on taxes while buying a holiday house.