Which is Better, a Plot or a Flat?
People often face a dilemma when it comes to choosing between a plot and a flat. Both have their benefits and limitations so it becomes important to analyze the future returns with these before investing.
The apartment culture has taken over the residential market in major cities of India, but people still cherish the desire to buy a plot of land and build their own home. If you intend to do so, you must gauge several aspects such as the cost of building, appreciation, financial assistance and income, carefully.
Buying an independent land means sovereign choice to build a house depending on one's own requirement. On the other hand, a flat apartment is a redesigned, multi-floored construction. The apartment buyer has lack of freedom to change the shape and size of the construction area. However, it benefits in matters related to security, accessibility and location advantages.
Various parameters can be used to analyze the advantages and disadvantages of the two choices.
1. Appreciation in value:
A plot is expected to appreciate exponentially as compared to a flat due to vanishing availability of space in cities these days.
A plot has high flexibility as it has the option of building as per requirements, while modification and expansion are limited in case of a flat.
3. Rental income:
Plots generate very low income and have a higher risk of litigation, while with the flats generate higher rentals.
4. Financial assistance:
Getting financial assistance for buying a plot is difficult as compared to a flat since financial institutions tend to avoid giving loans for purchase of plot.
While it may take some months or even years to get the possession of an apartment, plots are usually ready for possession. If your choice of plot is part of a township, you are likely to get possession of the plot earlier than a flat.
Tax treatment for plots and flat is different. When you take a home loan to buy flat or a builder floor, the monthly loan repayment allows you to save tax.
In the case of plots, tax deduction on interest is allowed only from the time once the construction is completed.
Both plot and flat have their own pros and cons, so the best approach would be to choose one after analyzing your needs, financial abilities, and liabilities. If you are merely looking to invest your funds for a few years until you are ready to invest in a flat, a plot in a location that will see appreciation in the future would be a good idea. However, if you are looking for regular returns, you may want to consider investing in a flat.
Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.