Should I sell my plot which is not appreciating in Price ?

POSTED BY Ravi ON February 27, 2014 10:14 am COMMENTS (3)

Hi Friends,

Before I pose my question, a brief about my current situation

I am living in own house in NCR with no loan liability. Currently I am investing approx. 30000 p.m. in Mutual funds. Having a plot in my home town with present worth 15 lakhs. This has not increased in past few years as there is very less demand for real estate in my home town.

Now the question:

Since the plot is not appreciating, I was planning to sell it off and buy second house (ready to move in) in NCR nearby my current house. The new house would be around 40 lakhs. So if I sell the plot, i would have to take approx 25 lakhs as loan. The EMI would come out to around 25,000 p.m. Since the new house is ready to move in it can be given on rent. The rent would be around 10,000 p.m. So in best scenario I would have to pay 15,000 p.m from my pocket and in worst case scenario when the house is not on rent I would have to shell out 25,000 p.m. In either case I would have to stop my SIPs in mutual funds. Now is this is a wise thing to do?

Should I sell the plot, go for new house and stop the SIPs OR should I keep the plot and continue with SIPs? Please suggest.

Thanks for reading my question and appreciate your response on this.

~Ravi

3 replies on this article “Should I sell my plot which is not appreciating in Price ?”

  1. Ravi says:

    Dear Ashal,

    Thanks for your response. Yes there would be some tax liability and interest paid on loan is an expense. But in the long run a house is an asset.

    Just wondering what would be other best option to invest 15-20 lacs coming from plot?

    Thanks,
    Ravi

    1. ashalanshu says:

      Dear Ravi, how about investing the plot money for long term for your retirement corpus in MFs?

      Thanks

      Ashal

  2. ashalanshu says:

    Dear Ravi, what about tax liability on rental income? Yes interest ‘ll be available for set off but remember it’s an expense ultimately.

    Thanks

    Ashal

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