Why Should House Be Included In Financial Year Planning?

By LODHA

As the new fiscal year approaches, reviewing and planning our finances for the remaining year is critical to have a clear picture of our income, expenses and financial goals. As a stable asset, real estate provides various tangible and intangible benefits. It is where you can start a new life, make memories and raise a family. Aside from the emotional value, a home can be a valuable asset that provides financial benefits such as high returns on investment, consistent cash flow through rental income, tax savings, diversification of your investment portfolio, and so on.

We will examine some of the factors that make buying a home a wise financial move in this article:

1. High Returns

High long-term returns on investment are among the most important advantages of home ownership. The value of a property tends to increase over time giving you a better return on investment when you decide to sell it, unlike other assets whose value may fluctuate. Your home's value growth can also help you accumulate equity, which you can utilise to support other financial objectives.

2. Tax Saving

By claiming a deduction for the principal and interest payments made on their mortgage, homeowners can reduce their taxable income. This may lower your taxable income and result in tax savings for you.

3. Affordable Housing

Because of the emphasis on affordable housing, you can purchase a home even in your early career. The Indian government has introduced several programmes to support the development of affordable housing, such as the Pradhan Mantri Awas Yojana, which entitles purchasers who fulfil specific income and other eligibility requirements to loan subsidies. For first-time buyers, this may help make homeownership more feasible and affordable. Furthermore, Grade A developers like Lodha, have begun constructing inexpensive housing developments with high-quality homes and amenities that promote a pleasant lifestyle.

4. Stamp Duty Benefits For Women Investors

For female investors in India, stamp duty rates are lower. For instance, in some jurisdictions, female real estate buyers are entitled to a lower stamp duty rate, which might be between 1% and 2% lower than the rate for male buyers. Women investors can save a lot of money because of these advantages.

5. Steady Cash Flow

A house can offer a consistent stream of income in several ways. Rental revenue is the most typical method. Rent from your property can be an excellent source of income because rental rates typically rise over time due to inflation.

A property can also present a number of chances for generating a consistent cash flow, whether through reverse mortgages or value growth. Homeowners can use these options to manage their cash flow and accomplish long-term financial objectives.

6. Tax Rebates For Maintenance/Renovation

The government offers tax incentives for repair and upkeep to motivate property owners to preserve and enhance their properties. Tax credits are available to homeowners for property upkeep or renovation expenses. This may lower the price of these costs and result in further tax savings.

7. Diversification Of Portfolio

Since real estate has traditionally exhibited little correlation to other asset classes like equities and bonds, it can help diversify an investment portfolio. Although real estate prices may not move in the same direction as other asset classes during market instability, this can assist in minimising total portfolio risk and volatility, giving your financial plan a sense of stability. In addition, house ownership can offer a sense of security and stability that is uncommon in other types of investments.

8. Hedging Against Inflation

Real estate ownership can offer protection against inflation in a number of ways. First, there is a chance that property values will increase faster than inflation, resulting in capital gains. Furthermore, rentals on homes used as investments may rise to keep pace with inflation. Finally, properties financed with a fixed-rate loan will see their monthly mortgage payments decrease over time.

In conclusion, a home is a crucial component of yearly financial planning because it offers a sense of security, long-term value, a buffer against inflation, a possible source of capital appreciation, and a steady supply of rental income. Due to real estate's historically low connection to other asset classes, buying a home can also help an investor's portfolio become more diversified.