Should you buy a home in a project that’s just begun or simply buy a finished flat? Sankar Srinivasan lists the pros and cons

Home buyers are always looking for the best deal they can find within the time and resources available to them. The market being low, this is the right time to invest. There are a lot of issues that need to be considered while choosing between a ready-to-move-in home and a home under construction.

When a project is announced, there is uncertainty about when you can get possession of the home. A majority of projects get delayed due to unforeseen circumstances. There is a loss incurred by home buyers during this period. The potential of renting the home is wasted if the duration of construction lasts more than a year.

Then, there is the issue of quality. Builders entrust the construction to a contractor, who may or may not execute a project well. There are promises made during the project launch about amenities, which are changed before the project is completed. Builders often do not get approvals for the amenities they promise during the launch.

When buyers buy ready-built homes, there is no scope for pre-EMI loss or rental loss, or construction delays. Nor is there anything missing — what you see is what you get when you buy it.

Here your main task is to ask the developer for all the documents — completion and occupation certificates, government approvals etc.

Of course, there is a flipside. When you buy a home that’s under construction, the price at the time of purchase increases considerably once the project is complete. Thus, your returns may be higher than from a ready-built home.

There are some taxation benefits with ready-built homes. These include:

The interest on the home loan is allowed as deduction from the date you buy the home.

The service tax component for an under-construction home burdens buyers to the tune of 12.36 per cent. However, the interest cannot be claimed every year, but only in the same year or the next year.

Given the supply surplus in the Chennai market, the city alone has over 1,600 projects that are ready-to-move-in.

(The author is founder- COO of Realtycompass.com)