A second property serves several functions as an investment. You can use it as a luxurious vacation/weekend home or to get away from the hustle and bustle of city life. When not in use, you can rent out the property to earn extra money. Furthermore, as an asset, a second house has a high capital appreciation value that may be used to reinvest in a better property in the future.
The rental money from the second residence can be used to pay off your home loan EMI or any other debt. Alternatively, this extra money can assist you in financing fresh assets. Remember that when real estate values climb over time, the rent from your second home will grow as well, providing even better ROIs.
If you buy a second house in a vacation destination with beautiful views and a pleasant environment, it can serve as a vacation home for your family. So that when you don’t have much money to go, this vacation home can serve as your getaway resort.
If your financial situation allows it, you can also invest in a second home for retirement and rent it out in the meantime to generate some extra money.
Property investments typically provide larger returns than other assets, especially if the property is in a prime location. Investing in a second house is a safer bet because the increase in property value cancels out the rise in inflation. Furthermore, if a financial emergency arises in the future, you can sell the second property to satisfy the necessary monetary commitments.
There are certain tax advantages to taking out a home loan in India to purchase a second home. Section 80C allows for tax savings on the principal amount, and Section 24B allows for tax deductions on the interest rates paid to service the loan. Borrowers can also claim a tax deduction of Rs. 1.5 lakhs under Section 80C on housing loan principal repayments and a deduction of Rs. 2 lakhs under Section 24B of the ITA.
The Bottom Line:
As the benefits described above indicate, investing money in a second house is a profitable alternative.
Do you want to own a second home and invest in a bigger and better property?