Renting out a second home? It’s Easy If You Do It Smart
There are many investors who invest in buying a second home. The fundamental benefit causing them to buy one is solely for the rental income they earn through renting or leasing it out. Besides the rental benefit, there are other purposes for buying a second home. It can be a retirement home or sometimes investing for profits in a long-term through capital appreciation.
However, renting out the second property might help you in one or other way financially.
Benefits of maintenance and monthly charges of the property
Imagine you bought a 2 BHK unit in apartments in OMR Chennai by availing a home loan. You must know both scenarios of renting and not renting it out. You, as the owner of the apartment, ought to pay the maintenance charges regularly in case the apartment is vacant. Renting the apartment to a tenant has two benefits.
(A) The maintenance and monthly charges should be paid by the tenant every month.
(B) You’d earn monthly rentals, which would help you pay your monthly EMIs and lessen the burden of paying the Instalments.
Thus, it is always better to rent out the second home to enjoy the benefits of monthly charges.
Though renting out the second home might appear easy, but might sometimes turn out risky too. There are many cases where the owner is unaware of rental agreements and other paperwork for a proper renting process. Owners fail to do a proper background check of the tenant whom they trust blindly and permit to occupy the place. Being careless and handing over the property in slapdash moments can cause huge risks in future. Also, find a potential tenant with proper background checks done before you consider them as your tenant. Also, the rent you offer must be reasonable and realistic. Check out the amount in the market with respect to the size of the place.
Tax benefits of renting out a second home
Renting out your property is considered taxable. It means your rental income is a fraction of the total income which is taxable too. Therefore, if you bought the second house through a home loan, then a specific amount is deducted from the rental income as it is entitled to tax rebates. For example, if you bought an Individual house for sale in OMR on an annual interest on the home loan of Rs. 3 Lakhs, then the annual rental income is Rs.1 Lakh. Now you are eligible for the tax rebate on subtracting Rs.2 Lakhs from the whole annual interest. This means, Rs.3-Rs2 Lakhs. The deducted amount is taken as your expense and hence the theory of tax rebate comes along. By doing so, some of the burdens from the home loan is reduced.
Other benefits of renting out the property
1. You are the owner of the income property (the second home).
2. Your second home is never left vacant even if you reside in the first home.
3. The monthly rental income goes to your pocket if you have bought the house without taking a home loan.
4. Your tenants will pay the monthly charges and maintenance.
5. The security advance deposit for the house can be used in needs.
6. Regular cleaning is done and kept clutter-free by your tenants itself.
7. You earn monthly rental incomes with the estimation of the house goes higher over time for a good resale amount at the same time.