What is a physical property: Types, Ownership Rules & Investment Benefits

A physical property is something that we can observe or quantify without altering the object itself. Physical characteristics include things like weight, size, and colour.

Let’s understand with an example:

• Shikhar buys a gold ring for ₹10,000.
• The ring is yellow, shiny, and heavy.
• These are its physical properties because they describe the ring without changing it.

About the Table Below:

The table shows different physical properties with simple examples.
 

This table helps you understand how physical properties work in everyday things.

The goal of this article is to make physical properties easy to understand.

Types of Physical Properties

Physical properties are characteristics of a material that we can observe or quantify without altering its nature. From real estate to gold bars, they assist us in recognising and contrasting various items.

Let’s understand with an example:
 

• Aman buys a gold bar for ₹50,000.
• The bar is shiny yellow, weighs 100 grams, and feels heavy.
• These are its physical properties because they describe the gold without altering it.

Physical properties are divided into two main types:

1. Extensive Properties (Depend on Amount)

These change based on how much of the substance you have.
 

• Weight: A 1 kg gold bar (₹5,00,000) is heavier than a 10 gm coin (₹50,000).
• Volume: A 2-litre water bottle (₹40) holds more than a 500 ml one (₹20).
• Length: A 10-meter rope (₹200) is longer than a 1-meter one (₹20).

2. Intensive Properties (Do Not Depend on Amount)

These stay the same no matter how much you have.
 

• Colour: Gold is always yellow, whether it’s 1 gram (₹5,000) or 1 kg (₹5,00,000).
• Density: Iron is always heavy for its size, whether it’s a nail (₹10) or a beam (₹1,000).
• Melting Point: Ice melts at 0°C, whether it’s a small cube or a big block.

Table: Physical Properties in Daily Life

The table below shows common physical properties with real-world examples.
 

This table helps you see how physical properties affect value and usage.

Physical characteristics make it simple to describe and contrast materials. Understanding these characteristics helps in science, business, and daily decision-making, regardless of whether the asset is land, water, or gold.

Ownership Rules for Physical Properties

The rights and legal ownership of a physical property are determined by ownership rules. These guidelines ensure that everyone follows the law and protects consumers.

Let’s understand with an example:
 

• Nitin buys a house for ₹50,00,000 in Haridwar.
• He gets a sale deed, pays stamp duty (₹3,00,000), and registers the property.
• Now, Nitin has the legal right to live in it, rent it, or sell it.

Key Ownership Rules for Physical Properties:

1. Right to Possess
   • You must have legal documents (like a sale deed) to prove ownership.
   • Example: A car’s RC book shows you own it.\

2. Right to Use & Enjoy
   • You can live in your house, drive your car, or wear your gold.
   • Example: Nitin can rent his house for ₹25,000 per month.

3. Right to Sell or Transfer
   • You can sell, gift, or pass property to heirs.
   • Example: Selling gold for ₹60,000 after buying for ₹50,000.

4. Tax & Legal Responsibilities
   • Pay property tax, capital gains tax, and follow local laws.
   • Example: Nitin pays ₹12,000 per year as property tax.

Table: Ownership Documents & Costs

This table shows important papers and expenses for owning different properties.
 

This table helps you understand what’s needed to legally own things.

Ownership rules make sure you have full rights over your property. These guidelines will keep your investment safe and legal, whether it's gold, a house, or a car. Always check documents and taxes before buying anything valuable.

Investment Benefits of Physical Properties

Over time, physical properties (tangible assets) like gold, real estate, and homes can increase your wealth. They offer additional advantages, like tax savings, in addition to protection against price increases.

Let's understand with Mayank's example:
 

• Mayank buys a plot for ₹20,00,000 in 2020
• By 2024, its value will become ₹30,00,000 (capital appreciation)
• He rents part of it for ₹15,000 per month (regular income)
• Saves ₹50,000 in taxes using home loan benefits

Why Invest in Physical Properties?

1. Beats Inflation
   • While money loses value, property prices usually rise
   • Example: Gold bought for ₹5,000 per gm in 2015 now costs ₹6,500 per gm

2. Tax Savings
   • Home loan interest deduction (up to ₹2,00,000 per year)
   • No tax on long-term gains if reinvested in property

3. Steady Income
   • Renting houses or shops gives a monthly cash flow
   • Example: ₹25,000 per month from a 2BHK flat

4. Safe Investment
   • More stable than stocks that change daily
   • Land never becomes worthless like some company shares

5. Borrow Against It
   • Use property to get loans at lower interest rates
   • Example: Get ₹15,00,000 loan against ₹25,00,000 gold

Comparison: Property vs Other Investments:

This table shows why properties often make better investments.

Physical properties help grow wealth safely over time. They provide rental income, tax benefits, and protection against price rises. Like Mayank, smart investors use them to build long-term security. Always check the location and legal papers before investing.

Conclusion

One of the safest ways to increase your money is to invest in physical properties (tangible assets) like gold, real estate, or homes. These assets remain with you and typically appreciate over time, unlike stocks or bank deposits. 

They also provide you with additional advantages like tax savings, rental income, and price protection. Physical properties contribute to long-term wealth, whether it's Mayank's plot, which increased in value from ₹20,00,000 to ₹30,00,000, or gold, which gains value annually. 

Just be sure to review all legal documents and pick reputable sites before investing. Your money will remain secure and continue to grow in this manner.

FAQs

Is buying property better than keeping money in the bank?

Yes, because property values usually increase over time. Your ₹20,00,000 house today could be worth ₹30,00,000 in 5 years, whereas the same money in a bank might only grow to ₹23,00,000- ₹24,00,000.

How much money do I need to start investing in property?

You can start small, even ₹5,00,000-₹10,00,000 can buy a small plot in developing areas. For homes, most banks offer loans covering 80% of the property value, so you might only need 20% as a down payment.

What's the safest physical property to invest in?

Residential properties in growing cities are safest - people always need houses to live in. Gold is also very safe, but doesn't generate rental income like property does.

Can I lose money in property investment?

Yes, if you buy in the wrong locations or don't check legal papers properly. Always research the area's growth potential and verify all documents before buying.
 

How do I earn a regular income from property?

By renting it out, a ₹50,00,000 flat can typically earn ₹15,000-25,000 monthly rent. Shops and offices give even higher returns but may have more vacancy periods.

What taxes will I pay on property?

You'll pay property tax yearly (about 0.5% of value), capital gains tax when selling (20% after 2 years), but get tax benefits on home loan interest.

Is now a good time to buy property?

Property is always good long-term, but prices may be lower during economic slowdowns. The best time is when you're financially ready with emergency savings.

How do I check if a property is legally clear?

Always verify the title deed, encumbrance certificate (showing no loans against it), and approvals from local authorities. A good lawyer can cost ₹10,000-20,000.

Can I invest in property with my friends/family?

Yes, but put everything in writing - who contributes how much, how profits will be shared, and exit rules. Joint ownership can be tricky without clear agreements.

What's better, buying old or new property?

New properties need less maintenance but cost more. Older properties in good locations can be cheaper to buy but may need repairs. Compare total costs before deciding.

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