How Can Youngsters Invest In Indian Real Estate For Rental Income
How Can Youngsters Invest In Indian Real Estate For Rental Income
Can a millennial like you and I buy a property and earn rental income? Is that too far-fetched of a dream and a question? "The sky's the limit," they say. However, given the harsh realities of life, buying a home in your young age in India looks to be an unattainable goal.
You've just recently started working, living paycheque to paycheque and maybe away from the comforts of home. You are barely surviving. But, we understand your anguish. It is not the end of the journey. Let me assure you that purchasing a home at your age is feasible in various ways. And generate rental income. You are now pretty much unstoppable.
Millennials, millennials, millennials. So-called "selfie generation." They want things fast and now. Yet they are also considered to be determined and competitive. Aside from that, millennials have stated that they do not want to be "tied down" to a specific location or employment, pushing them to shun real estate purchases like the plague. Aside from being known as the "selfie generation," millennials are also known as the "renter" generation. According to surveys, up to 60% of millennials do not intend to purchase a home shortly. The vast majority of them would rent. That begs the question, where is all that hard-earned money going?
Millennials are well-known for their disdain for 9-to-5 occupations, yet a substantial proportion of them do not find ways to generate passive income. Isn't it ironic?
Real estate is the best source of rental income available. Consider owning a house that you can rent out twice or three times the asking price. You may almost retire before the age of fifty if you invest in the appropriate spot, with the correct location and appreciation rates. That means spending less time at the office and more time doing what you want. If you're young and don't want to get stuck at a desk job for the rest of your life, you should invest in real estate to earn rental income because the country's real estate market is rising.
Firstly, what is rental income?
Rental income is money produced through renting out real estate that you own or have access to. You can own property on your own or with the help of another individual. Rental income gets generated through renting a home, apartment, room, office space, or immovable property. Rental income refers to the rent paid by tenants to their landlords. It includes the landlord's leasing space, furniture, and other fees. Cleaning shared rooms, providing hot water, heating, and maintaining the property are examples of such services.
The rental income varies according to the landlord and the property rented. The facilities provided, the size of each property, and the fact that locations are hotter than others all vary. However, rental income gets taxed under the Income Tax law.
What about tax on rental income?
Under India's existing tax regulations, whenever a commercial or residential property is leased or rented, the cash received in place of the property is referred to as "Rental Income." The rental income is substantial, according to the IPC. As a result, they should fall within the tax ranges outlined in Section 24 of the Income Tax Act. The government also makes no distinction between residential and commercial real estate. Therefore, 30% of your rental income gets taxed as income from residential or commercial property as a standard deduction. However, you can always avail yourself of the real estate tax benefits to save rental income tax.
And, what is the TDS on rental income?
TDS is an income tax that gets deducted by the payer when payments get made. It denotes that the person who receives the money in the transaction is taxed. TDS is a method of collecting tax at the point where an individual's income is earned. TDS gets levied on income sources, such as a landlord's rent, commission, professional fees, salary, interest, and so on. Under income tax rules, various types of income are subject to varied TDS rates.
TDS is intended to collect tax at the place of origin. According to this idea, everyone who gets compelled to make a specific payment to another person must deduct tax at the point of sale and remit it to the central government. The deductee is entitled to a credit for the amount deducted based on the deductor's Form 26AS for the TDS certificate.
So, what are the best rental income properties in India for millennials?
● Commercial Real Estate: Commercial real estate is a considerably safer investment for generating rental income. Blue-chip firms typically take up leases on these buildings for numerous years, assuring consistent rental revenue for a time. With India's ascent as a significant worldwide business destination, the sector is likewise seeing rapid expansion; the country's 537 million square feet of a rent-generating commercial real estate inventory gets valued at about $70 billion.
It will increase shortly as more global MNCs establish themselves in India. With the allure of commercial real estate investments, how do millennials purchase? It is where tech-driven platforms like Assetmonk come into play. This platform allows Indian millennial purchasers to invest in risk-adjusted, Grade A commercial properties subsequently rented to AAA international tenants to produce profits.
● Co-living homes: One may argue that natural property rental is also a possibility; nevertheless, joining a co-working space provides a more dynamic financial potential. While the sector is still working out the wrinkles, such as seasonal occupancy and high operational expenses, the promise in this market is apparent. When a person rents out their home to a co-living operator, they are guaranteed a high rental income yield uniformly, which conventional leasing out may not accomplish.
Compared to renting the property to a typical family, a co-living operator may place two to three tenants in one housing unit, increasing the homeowner's rental income. Co-living options are popular among India's millennials, whether students or migrant working professionals aged 18 to 35. Millennials make up around 30% of the population, co-living providers have a good chance of meeting this predicted demand. These new models boost effective rental yield up to 8%. As a result, investment in co-living arrangements can benefit young investors.
● Rental Property: The country's low-income groups have a significant demand for rental housing. Rental houses are the sole option for daily wage earners and migrant employees from the informal sector. According to government estimates, there are between 26 and 37 million homes in urban India. As a result, investment in the low-cost housing market of India generates a significant rental income.
● Airbnb: These Airbnb homes range from a cottage in the countryside to a large 7-bedroom property in the city. In recent years, the popularity of these types of homes has skyrocketed. It offers many advantages over traditional rental income, but it also has certain disadvantages. One advantage is that you may charge a per-night rent. In this scenario, if you have a home that gets occupied for most of the month, you may make far more money than if you only have one renter.