In India, a second home is often considered a luxury and classified as vacation home. However, there are others who buy a second property for investment purposes, and others to support their extended family. Whatever may be the reason the second home is looked upon as an additional source of income. There are many advantages of possessing a second home.
Buying a second home is more or less similar to buying the first home, although the dynamics and the reasons behind wishing for a second home might vary. We do have to realize that most buyers look to invest in and/or build Properties in Hyderabad that are enhanced than the first; either to match the existing lifestyle and/or surpass. Therefore, many factors like location, affordability and purpose play a pivotal role. Here are few things to keep in mind before investing in a second home:
- Land or Home: One of the first steps is to decide if you want a piece of land that you can use at a later stage or a home that you can move in or rent out.
- Purpose: After the analysis of land or home is done, the next step is to reason out why you need this second property. This decision should be taken simultaneously along with the above point. There can be a myriad of reasons: investment, vacation home or retirement home. Based on this the price, location and ultimately the future of the property depend. Factors like returns, comfort, status-quo and neighborhood do place a major role.
- Finances: This should be a crucial aspect of your decision of buying a second home. If you have already taken a loan for the first home, then taking another for your second might have some implications (and often not advisable). You would want to clear off the first loan before taking another.
- Location Matters: Do you want to invest in the city or the
outskirts? If you decide to take a home in the outskirts, then factors
like security, returns and value come into play. If you think that a
second home in the city is best suited for you, then factors such as location, neighborhood and purpose come into play.
- Buy a home that is appropriate to your age: After all these decisions, you would definitely come to a conclusion. This conclusion should be the basis of the type of your home. For example, if you need a retirement home, the size of the property needed for you might not be big as both you and your spouse would be old and cannot run around a huge house and/or for amenities.
- What are you going to do with first house: Another important factor that you need to consider is what will happen to the first house? Are you going to shift permanently to your new second home? Often, people shift to the new house and put up the old one for rent.
- Tax Implications: Owning a second home has tax implications even when you do not let it out. If you let out your second home, the rent (and the prevailing market rate when you do not let it out) will be considered as taxable income. Deductions are not allowed for repair and maintenance expenses. In addition, if you let out either of your two homes, you would be subjected to wealth tax.
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