A home buying describes elevation in your life and if it is a second home buying then surely it brings out the best for you. Yes, buying a second home is a long-term investment in two scenarios. In case one, the second home act as a retirement home and the other case makes you financially empowered as you rent this property and earn monthly income.
Apart from this, there are various other benefits which you can avail by doing so. We have brought the list of advantages of renting a second home, as the interest rate on home loan goes up and down along with the fluctuation in inflation rate. Take a look at how to pull out maximum benefit by hiring tenants.
1. Help You pay EMIs
Not every prospect has the financial backing to pay two home loan EMIs in one go. But, sometimes your financial condition allows you to own two homes while managing the funds. So, in this case, we suggest you buy a second home and rent it. The rent you get from the second home will act as a financial funding for paying the EMIs of the same. Therefore, you need not worry about payback of the home loan for the second home.
2. Maintenance of Property
It’s not easy to maintain two properties at a time. Hence, renting out a second home is the best option as the property remains in good shape due to everyday cleaning. Also, you are able to fix problems such as water leakage, faulty electricity boards and other things as the tenants need accurately working fittings and fixtures. This is the second best reason to rent a second home.
3. Tax Benefit of Renting a Second Home
The homeloan amount comes under tax deductions and it is similar in case of buying a second home. In fact, a person is eligible for tax deduction minus the amount one receives as a rental income from the same property. Let us understand with an example, if your interest rate on homeloan per annum is rupees 3 lacs and you collect 1 lac rupees as a rented amount per year then you can avail a tax deduction of 2lacs while paying the income tax. This will lower your tax payable amount even after having two properties by your name.
4. Act as an Additional Source of Income
The rental income that gets credited to your account on a monthly basis works as an additional income which you can use or save according to the requirement.
These are the benefits of renting a second home as it makes you financially secure while keeping the cash flow smooth forever.