Residential vs non-residential land Purchasing a developed home is very different from investing in land. The type of land you invest in, however, has a significant impact on your return on investment. Which offers a higher return on investment, residential or non-residential land? is one of the most commonly ask questions by all investors

1. Residential VS. Non-Residential Land
Introduction Residential VS. Non-Residential Land
Residential vs non-residential land Purchasing a developed home is very different
from investing in land. The type of land you invest in, however, has a significant
impact on your return on investment. Which offers a higher return on investment,
residential or non-residential land? is one of the most commonly asked questions
by all investors. The purchasers are ignorant that there are various types of non-
residential land, each with unique challenges and development potential. If you're
having problems making a choice, it's critical to comprehend the many forms of
property parcels and the possible returns on investment from that piece of land.
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2. Land is generally divided into residential and non-residential uses based on usage.
Additionally, non-residential land is divided into
• Commercial
• Business
• Agribusiness
Independent investors have a choice between purchasing industrial, commercial,
and agricultural land. The government holds the land set aside for transportation
and recreational uses and grants it to private developers through competitive
bidding.
Residential Land
Residential land includes any plot, parcel, lot, tract, or piece of property that is
used or intended to be used primarily for owner-occupied dwellings or tenant
accommodations. housing for lone families as well as
Multifamily housing can be built on residential property to count as residential
real estate.
The local development authority or the department of town and rural planning
zones a plot of land for residential use. However, you can use it for other types of
investments, such as earning rental revenue or, in some exceptional cases, for
industrial or agricultural reasons.
How To Buy Residential Land
You must first write an agreement with the seller on stamp paper costing Rs. 50
before you may purchase land. The agreement should include information like:
• The agreed-upon price for the land
• Information on the down payment
• What will happen if one of the parties doesn't pay for the sale?

3. • The specifics of the land, including its dimensions and location
The next stage is to register the land after the agreement has been created. After
completing the necessary paperwork and paying a registration fee that varies by
state, you must register with the office of the Sub-Registrar of Assurances. The
required documents differ from state to state as well. For example, in
Maharashtra, you must submit the property card and the 7/12 extract paperwork,
whereas in Gujarat, you must submit a photograph of the plot.
The last stage is changing the property title in the land and revenue records of the
local administration or municipal authority from the old owner to the new one.
How Can Residential Land Be Used
The main purpose of residential land is to construct a single-family home or other
type of building.
A Complex Of Condominiums Or Apartments
The land may also be invested in as a rental property. You must take into account
a few aspects, such as
• The property's accessibility to town amenities like schools, retail centres, and
places of employment
• The property's road accessibility and connectivity to the town's major nodes
Non-Residential Land
Non-residential land can be defined as any parcel of land devoid of any dwellings.
Additionally, undeveloped land is considered non-residential but can become
residential if a residential building is built there within a reasonable amount of
time. A facility for delivering healthcare, constructing an educational institution,
housing students, or other uses are all possible on this type of land.
a hotel, for agriculture, for providing palliative care, for building factories, for
correctional or rehabilitative facilities, etc.
Non-residential land is further divided into numerous groups according to its
specific use:

4. Industrial Land
Industrial land is land that is used to build factories or assembly lines for
manufacturing. In order to prevent disputes between commercial interests and
neighbourhood residents, cities and towns frequently set aside specified regions
or parcels of land for industrial onstruction. Businesses use this kind of land to
construct factories, warehouses, cold storage facilities, light manufacturing plants,
and R&D facilities.
Commercial Land
On property set aside for commercial development, offices and retail areas are
typically constructed. This land is typically found in urban centres or in places that
are easily reached by public transportation. Commercial property delivers high
income at a larger risk than residential property, which has lower and more
consistent returns. According to how far they are from the city centre,
commercial land is frequently divided into three categories: primary, secondary,
and tertiary. If you want to purchase commercial land, look for a place that will
soon have infrastructural improvements nearby.
Benefits Of Investing In Commercial Or Industrial Property
Commercial and industrial real estate are regarded as being among the most
lucrative investment opportunities in non-residential real estate. Investing in
commercial or industrial property has the following benefits:
Greater Yields
Industrial real estate's value may rise by seven or ten percent a year because
there are fewer variations in the market value of such property. With such strong
returns on investment, the initial expenditure is quickly recouped. Commercial
properties are also known to offer greater rental yields of 3–4% compared to
residential properties’ (1-2%), making them a more advantageous investment
vehicle.
Enduring Tenants

5. Leases for industrial and commercial real estate are often longer than those for
residential real estate, ranging from three to ten years to as long as 99 years. This
guarantees a steady stream of revenue over time with little effort from the
landowner.
No Maintenance Charges
When it comes to industrial or commercial premises, the tenants are typically
responsible for doing maintenance tasks and making repairs because they like to
maintain a welcoming storefront for generating revenue on their own terms. The
landowner incurs fewer maintenance costs since the tenants renting industrial
land appreciate little intervention from the landlord in their operations.
Renters Are Paying Tax
The terms of leases for industrial and commercial properties are typically written
so that renters are responsible for paying the property tax as well as other fees
like the council rate, water rate, and land tax.
Agricultural Property
Agricultural land is defined as arable land that is used to cultivate perennial crops
or pastures. Only farmers are permitted to purchase this property under the
regulations governing the sale of agricultural land. However, a number of urban
investors are discovering ways to invest in this kind of property in order to
generate sizable returns on investment over time. Agricultural land can only be
used for farming; if the owner wants to use the land for residential or commercial
uses, they must convert it to non-agricultural land.
Benefits Of Purchasing Agricultural Land
Possibility Of High ROI:
Due to the availability of agricultural land in rural and emerging areas, as well as
the potential for prospective infrastructure projects like special Such land may see
an exponential increase in value due to special economic zones (SEZ) and
motorways. This guarantees excellent resale value and substantial guaranteed
returns on investment.

6. In The Case Of A Government Project, The Cost Of Compensation :
The government may purchase privately owned land for public development
objectives under the Land Acquisition Act of 1894, and it typically purchases
farmland for this reason. The government provides the landowner with adequate
compensation, which is higher in the case of rural land than in urban areas, based
on the worth of the land and improvements made to the land.
Free From Taxation
Since rural agricultural land is not regarded as a capital asset, selling it may
completely free you from paying income tax under the capital gains heading.
Additionally, the money the government got for the forced seizure of this land is
not taxable.
Cons Of Purchasing Farmland
Agricultural Land Can Only Be Purchased By Farmers
Only an agriculturalist is allowed to purchase agricultural land in the majority of
Indian states. In this case, the only ways for a non-agriculturalist to inherit the
land are by gift or bequest.
Complex Conversion Procedure:
It takes a lot of paperwork and complicated procedures to change "land use" from
agricultural to residential or vice versa, which causes delays. However, a number
of states have elected to convert via the internet, avoiding many of these
obstacles.
Land Ceiling Act:
Your ability to own a particular quantity of land is regulated by land ceiling rules,
which differ from state to state. The amount of land that can be held is
substantially less if the land is watered for two crops annually than if only one

7. crop were cultivated there continuously. The amount of agricultural land you can
lease is also restricted by these restrictions.
Advice On Purchasing Farmland
Due to the fact that the money generated by farmland is tax-free, owning
farmland can benefit you greatly. The laws governing the sale of agricultural
products vary by state, nonetheless. For instance, Telangana permits you to
purchase agricultural land regardless of your level of farming skills.
But in Karnataka, you can only buy arable land if you are a registered farmer.
Additional requirements for purchasing farmland
• Verify the land's clear title before purchasing it.
• Verify whether the property has ever been involved in litigation before.
• State regulations must be confirmed because some states have a cap on the
amount of farmland you can own, while others forbid converting agricultural land
to residential land.
• Check to see if the property is listed as farmland with the land and revenue
authority.
Agricultural Land Becoming Residential Land
After receiving the required approval from the local authorities, you can change
the use of agricultural land from agriculture to residential by filing a "change of
land use" application. You must first inform the commissioner of the Department
of Land Revenue in writing of your plan to convert land. You must provide the
following paperwork with your application:
• ID proof
• Letter of mutation
• Original gift partition or sale deed

8. • Most recent tax receipt
• An official map of a land survey
• Information on the size of the property, current and previous owners' identities,
the types of crops and soil, mortgages, and court cases
Any real estate investment, whether residential or commercial, necessitates that
the investor take the entire property into account. The atmosphere for leasing
now
The level of returns on investment is determined by current market trends, legal
restrictions and permissions, distance from significant industrial and commercial
hubs, and other specifics. You can choose the type of land you wish to invest in
after weighing all of these factors.
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