What Should I Buy? Under Construction Or Ready to Move In Properties

What Should I Buy? Under Construction Or Ready to Move In Properties

Buying a new home is one of the most important decisions as well as investments for an individual. Our dream home is often associated with our lifestyle, budget, and sentiments. Although the basic amenities, location, and connectivity are major factors while buying a dream home, the important question is whether to buy a ready-to-move property or an under-construction project?

Therefore, we have come up with some major pros and cons for both types of properties to solve your dilemma.

Under construction properties: Pros and cons

Pros:

• Cost: Under construction properties are relatively cheaper as compared to ready-to-move-in properties. However, it usually depends on the location.
• Age of property: As it is a newly constructed site, there are no issues related to the aged property or extra renovation cost.
• Payment: The payment bracket also remains quite flexible as compared to a ready-to-move-in property. You’ll have more time in hand to arrange payment, registration charges, stamp duty, etc.
• Formalities: As a newly constructed property will be handed to you with no previous owners, there is less documentation and formalities.
• Negotiation: There are high chances of getting discounts & offers from the developer.

Apart from the advantages mentioned above, higher Appreciation/Better Return on Investment, Choice of Inventory, and RERA Compliance also contribute.

Cons:

• Delivery risk: There is always a Possession/Delivery Risk associated with under-construction sites as there are high chances of difference in product delivery. For example- the blueprint or claims shown to you can differ from the actual layout, amenities, etc. 
• Neighborhood: In the case of under-construction properties, the neighbors and other social aspects come as a surprise to you.
• Resale: It is relatively challenging to sell an under-construction property if the possession is delayed due to any reason.
• Tax implications: No tax benefits for individuals with home loans till you get the possession. You have to bear the additional burden of taxes like GST & VAT. That’s right; the latest GST implication levies a 5% tax on the purchase of under-construction properties. However, that does not apply to ready-to-move-in properties.

Ready-To-Move-In properties: Pros and Cons

Pros: 

• Immediate possession: Ready to move in property call for Immediate Availability. Thus, you don’t have to wait for possession and risk associated with delayed possession, disputes, etc.
• You get what you see: When you buy a ready-to-move-in property, you get exactly what you see. In the case of under-construction properties, this is not the case since you never see the final product; rather, you get samples or “projections.” It’s a good idea to chat to individuals in the area or neighbors about water/electricity and other issues and get their input.
• Fewer tax implications: There are no Implications of GST/Service Tax/VAT, unlike the under-construction properties.
• Tax benefits: You can enjoy immediate tax benefits on the Home Loan Principal & Interest part.
• Neighborhood: Compared to under-construction sites, ready-to-move-in properties are already inhabited societies. Therefore you can visit and have an idea about that particular neighborhood and know what you are investing in.

Cons:

• Cost: Ready-to-move-in properties are relatively higher in cost.
• Age of Property: The property’s age can be a make or break factor when buying a ready-to-move-in property. No one would want to invest in an old/aging property prone to damage and repeated maintenance.
• Payment flexibility: There is no flexibility, and you might need to proceed with the complete down payment.

The above factors play a crucial role in choosing the right kind of property. As buying or investing in a new home can be a life-changing decision, make sure you consider all the essential points and proceed according to your requirements.

Financial Calculation, Considering possession by 3 years

*Tax Benefits – Rs. 2,00,000 Interest on home loan, 30% of which is Rs. 60,000. Multiplied by 3 years