Rental Income: Residential vs Commercial Property!

Difference between Residential and Commercial Property

A residential building has capacious area, open spaces and dedicated parking arena. Whereas the commercial properties comprise of lesser space and won’t actually have a detailed structure of a washroom or a pantry. These two elements are separately constructed in the space you have for running a shop, coaching centre or any other business.

Residential vs Commercial Property

Residential versus Commercial Property

  • Price Difference –

    One requires paying off the higher rental amount for occupying a commercial space instead of residential one. This is so because the business offers more income in comparison to the limited income of a salaried person.

  • Long Lease Tenure –

    The commercial spaces are lent on a longer period of lease and thus the user of this land need not worry about changing the business unit frequently like a tenant who has to sign the 11-month rent agreement with the landlord.

  • Maintenance –

    The tenant is responsible for the maintenance of the commercial property whereas the landlord is required to maintain his/her property that is vacated by a tenant.

  • Location Matters –

    Both commercial and residential units have the potential to offer handsome rental income. But, the location plays an important role as some businesses earn betters in few locations while some won’t run fairly.

Benefits of Residential Property to Earn Rental Income

  • Increase in Income –

    The landlord has the option to earn increased rental from the tenants as and when the property prices increase. Also, the increase in the rental value in the property market offers higher rental income from the tenants.

  • Rebate in Tax –

    The rental income earned from a residential property helps you to get a tax rebate.

  • Option to Use-Freely –

    You can hire a tenant or can also keep the partial possession while hiring tenant for a particular space.

  • Lifetime Investment –

    This property can be transferred into the name of your legal heir or else can be in your name until the time of death.

Benefits of Commercial Property to Earn Rental Income

  • Regular and Fixed rental income to earn over a period of time.

  • Can Avail Relaxation under the Income Tax Law.

  • Longer duration of lease-land.

  • Capital Value of the commercial unit increases with the passage of time.

On a whole, both these properties offer a different set of advantages. Therefore, study the details carefully and figure the right property to invest in if you are planning to earn a rental income from the same.