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Important concerns for those buying a holiday home

A holiday home is a prized possession of any person worth his money. Each buyer looks for a good place to crash in when away on a vacation and if that place is his own, then the true meaning of holiday comes alive. 

Many of us must have dreamt of a place, away from the maddening crowd and noise of the city, where we can find some peace of mind and get refreshed before getting ready for another bout of the city’s crazy routine. A holiday home is a perfect place to be, without any usual hullabaloo and unnecessary babble. From the investment point of view also, owing a place at a popular destination is always profitable, making perfect business sense.

 With a distinct growth in high income group of society, families are looking to buy homes at their favourite holiday destination, which they frequently visit. Such places often have unrealistic real estate prices, but money is not a matter of concern for this affluent class, after all.  A majority of the buyers belong to younger generation, who follows the principle of work hard and party harder. NRIs also form another major section of buyers, using these homes for dual purpose of business as well as pleasure. Therefore holiday home is fast rising as a niche housing segment in India. There are a few things that are to be kept in mind before buying a holiday home:

 

Is it really worth it?

 Sometimes people fail to judge properly the decision of buying a property at holiday getaway.  Only those people who have a long term surplus capital should consider taking this step. A holiday place will more often than not, cost upwardly of what a regular home costs. It is a substantial investment and hence must be done while keeping all consequences in mind. Also, maintaining a holiday home can often drive your budget out of bounds. Keep a backup plan, lest things turn against you.

 Location

 Zeroing in on the location is the most important as well as the most obvious step. Instead of buying a home in popular holiday destinations like Goa just because your friend or someone you know advised you to do so, you should always consider your favorite holiday getaway for this investment. For most of us, distance is a major factor that decides the location of our holiday home. Therefore, buying a place very far from your regular residence, reaching where requires advance booking or travelling plan is not advisable. Further, since it will be you who will be frequently visiting the place, going by people’s choice is not recommended.

 How to make it a profitable investment

 Besides being a leisure destination, a holiday home can also prove to be a very profitable investment. These luxury symbols can be rented out to others when you are not visiting it. This way they can earn you good rentals, which can be used to offset the maintenance cost of that place. Such rentals thrive in popular holiday destinations like Goa, where there is a large influx of tourists all round the year. A major part of property in Palm Beach road in Navi Mumbai is also constituted by such rentals only.

 Taking into considerations the tax implications

 The Income Tax, 1961 Act states that the income from a second home, which is called as notional rent is considered the income of the joint owner and is taxable. However, some relaxation can be availed as per the norms.

 In short, if you are considering buying a new holiday home make sure to check yourself on all of the below given reminders and then take the plunge:

  • Do I need it?
  • Research
  • Location
  • Budget
  • Property size
  • Maintenance
  • Tax implications
  • Making it a source of income

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