For a homebuyer, it is tough to decide whether to buy a plot or a flat. However, a buyer must gauge all pros and cons regarding cost, price appreciation and other parameters. Whether to buy a flat or a plot is totally an individual's choice, but it is important to do your due diligence before you decide to invest your hard-earned money.

Finances

Finance is easily available for government approved plots but non-govt approved plots may not get financing easily from banks. The interest rate is also likely to be lower for such plots. On the other hand, a buyer can easily avail financing to buy a flat as long as the eligibility criteria is met, and the property has all approvals.

Flexibility

If you choose to buy a flat, you have no option but to stick to the design offered by the developer. You cannot make any exterior or interior changes in the structure. A plot, on the other hand, gives you flexibility to construct and design as per your requirements and choice.

Risk involved

Buying a plot involves some risk if the property does not have the required approvals from the government authority and if it has any legal dispute. However, in case of a flat, you can check the RERA number and find out all the details on the RERA portal of the state. If the flat is under construction, then you face the risk of delayed possession. In this case, your financial liability will be for a longer period if the delay is longer than expected. In the case of plots, you are likely to get possession earlier than a flat. "One should buy a plot from the legal owner of the property. For example, a plot scheme launched by a builder will have a RERA number and other details. If you are buying from an individual land owner then you need to check the revenue records, title of the property and municipal records. A plot also has the potential to appreciate more than flats," 

Encroachment

Often, buying a plot from people other than reputed developers may put your investment at risk owing to encroachment. A plot can be easily encroached upon and you may never get the plot for which you have paid for. But flats are not only safe but also risk-free if you have done all your legal due diligence before buying.

"In the investment of both land and built-up property, it is also important to ensure that the identified property is free of encumbrances such litigation, free and clear title, and reasonable chances of getting sold in the future,"

Rental income

Flats can give you rental income depending on the location and amenities. A plot can give you rental return only when you construct a house and the location develops enough to fetch you returns. Owing to facilities such as gym, swimming pool, club house, etc, flats are mostly preferred by working professionals. Safety is one of the biggest attractions for flats in gated communities.

Tax benefit

If you buy a flat, you can avail tax benefit under section 80C, section 24 and 80EE on the home loan. You can claim a maximum deduction of Rs 2 lakh under section 24 for a self-occupied property. Under section 80C, for both self-occupied and let-out properties, you can claim up to Rs 1.5 lakh. An additional deduction of Rs 50,000 is allowed for a first-time buyer under section 80EE. However, there is no tax benefit on buying a plot. Tax benefits can be claimed only when you construct a house on it.