Inherited Property? Here’s How To File ITR

Inherited Property? Here’s How To File ITR

Inherited Property? Here’s How To File ITR

Given that most Indians pass on their wealth and property to their legal heirs, it must for them to furnish the details about such assets when filling the Income Tax Return (ITR). If you have also inherited a property, here is a look at how you could file the ITR.

Things to know

*Even after the death of a homeowner, assets passed on from him/her to legal heirs, rather, the income generated from these assets must be shown by the legal heir. Section 159 of the Income-Tax Act suggests that the legal representative is liable to pay the tax that the original owner would have paid if he/she was alive.

*Legal heirs must pay only as much income tax as is his share in the assets bequeathed to him.

*The returns have to be filed in two parts- one where the income of the deceased is calculated and second, wherein after the death, the legal heir starts earning from these assets. Do remember that the pre-death returns that need to be filed should be done by the legal heir. Therefore, if the assesse died in February 2017, the returns have to be filed on his behalf by the heir and pay the tax from April 2016 to February 2017. Thereafter, the legal heir can file his own returns because the income borne out of the property is his alone.

How to file

Once you log on to https://incometaxindiaefiling.gov.in , go to the account of the deceased and add or register yourself as a ‘representative’. You would get this option under the ‘My Accounts’ Section. Note that this is a ‘New Request’ and that you must register yourself as a ‘Legal Heir’. You would be asked to proceed with details about the deceased such as his or her name, PAN and date of death. Keep a scanned copy of both the deceased and the yours handy as well as a copy of the death certificate and the registered will, family pension certificate as well or a letter issued by the bank that could confirm whether you are the nominee. All these copies have to be uploaded in a zip file not exceeding one megabyte (1MB) in size.

After submitting, a transaction ID and an acknowledgement would be generated. Once verified, the legal heir would be able to use all the services on behalf of the deceased through his own e-filing account. Thereafter, he must file the return on the deceased’s behalf. The legal heir would also have the option of choosing the PAN card of the deceased through a drop-down list. In the income-tax return do prefix ‘Late’ in the deceased’s name.

What to know about inheritance tax

Such a tax was abolished in 1986 therefore you are not liable to pay taxes on gifts on inheritance. But, you must remember the following:

*If the legal heir sells his inherited property, then capital gains tax comes into play. For this purpose, the cost of acquisition of the inherited property to the deceased shall be considered as the cost of acquisition by the heir. The period of holding by the deceased also counts.

*If the income of the heir including his inheritance exceeds Rs 50 lakh, then the heir is liable to provide details of all his assets and liabilities. Check Schedule AL.

*Income from capital gains tax is reported under Schedule Capital Gains in the ITR Forms.

*Looking for a tax refund? You would be required to fill details of your joint bank account for easy refund. If you do not have one with the deceased, then, the Centralized Processing Centre or CPC shall verify details and refund the amound in your name.

*If the heir has succeeded to the business of the deceased, then the heir also has to take up the loss incurred by the deceased which cannot exceed eight assesment years.

*Do remember to surrender the PAN card of the deceased after all filing and returns.

Buying a house from NRI seller? Important to know the TDS laws

Buying a house from NRI seller? Important to know the TDS laws

Buying a house from NRI seller? Important to know the TDS laws

Taxation on Sale of Property by NRI’s (Non Resident Indians) is bit confusing subject. This confusion is caused due to lack of information and improper explanation. Sometimes it is in the interest of few professionals to complicate things and confuse NRI clients to maximize their gains. In most of the cases, i observed that neither buyer nor NRI seller are aware of what to do. Let me admit that Income Tax Act is not that complicated but it is in the hands of people who interpret it to make it complicated or simplified. To start with, Selling of property by NRI is taxable under u/s 195 of the Income Tax Act, 1961. I will discuss how to deduct TDS u/s 195 in my future post. This post is dedicated to my NRI friends who would like to know about their TDS liability at the time of sale of Property in India. Let me clarify most common confusion first, TDS of 1% u/s 194IA is not applicable if seller is NRI. TDS u/s 194IA is only applicable for resident Indian sellers. It is quite unfortunate that most of my NRI clients lost money as TDS was deducted under both the sections i.e. section 194IA and 195. As this subject is quite comprehensive therefore i will discuss it in 2 parts. In my next post, i will discuss How NRI’s can Lower TDS on Property Sale?. In this post i.e. NRI’s and TDS on Sale of Property we will understand the basic concept of TDS. I will try to keep this post very simple as there is a common perception that this subject matter is complex :).

Broadly speaking any NRI selling a property in India, there are 3 main points related to taxation as per income tax act, 1961

(a) Capital Gain Tax from Sale of Property: Long term capital gain tax will be 22.66% if NRI is selling a property in India after holding it for more than 3 years. In case holding period is less than 3 years then Short Term Capital Gain Tax will be applicable as per income tax slab. In case of short term capital gain, TDS applicable will be 33.99% irrespective of tax slab of the NRI. Not many people know that Capital Gain Taxation is same for both Resident Indians and NRI’s but only difference is in calculation and deduction of TDS. If you wish to know more on these 2 types of capital gain tax then you can check my post on Long Term Capital Gain and Short Term Capital Gain. Basically, the key concern of Income Tax department is that any capital gain arising out of sale of property in India then corresponding income tax should be paid in India. For resident indian seller, as he is staying in India therefore he does not have any other option but to comply with income tax rules and regulations. Since NRI is staying outside India therefore it is very difficult to ensure capital gain tax compliance after the property transaction is completed. In order to ensure compliance, Income Tax Department came out with an innovative idea to ensure that buyer deduct TDS at the time of making payment to NRI seller. TDS u/s 195 is deducted only to ensure capital gain tax compliance.

(b) TDS u/s 195: In case of sale of property by NRI, it is mandatory for buyer to deduct 20.66% TDS on the sale price of the property if capital gain is long term capital gain. In case of short term capital gain, TDS will be 33.99% irrespective of income tax slab of NRI as i mentioned earlier also. Buyer will deposit TDS with Income Tax Department. TDS is applicable even if value of property is less than 50 lakhs. For resident Indian seller TDS of 1% is applicable only if the property value is more than 50 lakhs.

Now anomaly in this rule is that NRI is liable to pay Capital Gain Tax only on the Capital Gain arising out of sale of the property but unfortunately TDS is deducted on the total Sale Value of the property. Therefore in most of the cases there are no GAINS as such from the sale of property and actually NRI incur LOSS from the sale of the property if TDS refund is not claimed. As a result, NRI has to go through the process of claiming TDS refund from Income Tax Department. 

(c) Re-Investment of Capital Gains: In many cases, i observed that to save capital gain tax my NRI clients planned to re-invest the capital gain from sale of property to save capital gain tax. Long term Capital Gain can be invested in either property or tax exempt bonds to save long term capital gain tax. In such cases, NRI can apply for Tax Exemption Certificate from Income Tax Department under section 195 of the income tax act, 1961.

All the above mentioned 3 points are inter linked to each other. The biggest confusion arises when all 3 are points are read in isolation or mutually exclusive to each other. In my next post How NRI’s can Lower TDS on Property Sale? we will understand this concept with detailed example of one of my client Mr Ashok Taneja from USA. Now even if TDS is deducted then under following 3 possible scenarios NRI’s can claim TDS refund

TDS Refund by NRI’S

1. If your country of residence has Double Taxation Avoidance Agreements (DTAA) with Indian government i.e. lower rate of TDS is allowed. NRI need to submit a tax residency certification from the country of his residence. it will certify that you are a tax paying resident in that country and that tax on this income is paid in that country, it ensure no tax leakage for either countries.

For example, In US, the tax residency certificate is called Form 6166. You can make application to the Internal Revenue Service (IRS) in Form 8802. In UK you need to get the tax residency certificate from the HM Revenue and Customs.

2. If your total income in India is less than basic exemption limit of 2.5 Lac: In this case, you can apply for TDS waiver with Income Tax officer under whose jurisdiction your case will fall.

3. You can claim TDS refund if can show proof of reinvestment of capital gains in India. You can either buy another house in India or invest in capital gains bonds u/c 54EC. You should submit an affidavit stating that you will invest the capital gain amount in capital gain bonds. For property purchase you can produce allotment letter or payment receipts.

Instead of claiming refund which is more tedious process it is always advisable to apply for NIL Tax Deduction / Tax Exemption / Lower Tax Deduction Certificate. It require some intelligent planning before sale of property and proactive approach. We will discuss the same in next post How NRI’s can Lower TDS on Property Sale?.

Taxing Inventory Will Burden Builders Further

Taxing Inventory Will Burden Builders Further

According to a media report, from the next financial year, real estate developers who are holding an unsold unit for over a year will have to pay 8-10 per cent of the property value as tax. So far, developers do not pay any tax on property that they hold as stock-in-trade.

The little tweak

According to the income tax laws, properties, including flats, shops, office space, factory sheds, agricultural land and farm houses are “house property”, and their annual worth is taxed under the head “Income from House Property”.

Under Section 22, the I-T Act imposes the tax on house property that is not occupied by the owner – the tax has to be paid whether the house is rented out or is lying vacant. The tax is imposed on higher of either the actual rent received or the notional letting value.

However, Section 22 does not cover the property which is being used for the purpose of business or profession. Such properties are liable to be taxed under the head of “Income from Business and Profession”. There is a distinction between capital asset and business asset or stock in trade. To tax the housing inventory, stock-in-trade will not be brought under the head Income from House Property.

“We are assessing the pan-Indian real estate data of unsold flats, which have been kept for more than a year. The tax department is taking the stocks of state-wise unsold inventories, which could fall under the new tax regime,” a report published in Business Standard quoted an I-T official as saying.

The likely impact

With this move, the government is aiming to force developers to end the artificial shortage created in the housing market. This is also one way to escape taxes, too. Because they will have to pay taxes for holding, developers would now put all their might to sell off their existing stock. For a home buyer, this means more options to pick from, at more reasonable rates.

However, there is another way to look at it. Developers who have not been able to sell their projects owing to genuine reasons will also have to suffer. The added tax liability to keep the stock may force real estate developers to go for distress sale, something that will cause a major dent in their already depleting finances.

New Lending Benchmark Rates to substitute MCLR !! May Make Home Loans Cheaper and more reasonable !!

New Lending Benchmark Rates to substitute MCLR !! May Make Home Loans Cheaper and more reasonable !!

 

The opprobrium did not inspire banks to bend. Time after time, the Reserve Bank of India (RBI) has plainly and severely expressed its displeasure on banks not passing on the policy benefits to customers, urging them to do so.

“Given the prevailing liquidity conditions and that we have reduced policy rates by substantial amount since the start of easing cycle, I think there is scope for banks to reduce lending rate for those segments. So far, they have not benefited to the full extent of our policy rate cuts,” RBI Governor Urjit Patel said in August this year.

Now, banks may not be left with any scope to manoeuvre lending rates in their favour as a new benchmark to set rates may be put in place.

An internal panel, set up by the RBI to examine various aspects of the MCLR system, has recommended linking of the bank lending rates to external benchmarks. The panel submitted its report to the RBI on September 24.

Old practice

With an aim to improve policy transmission, the Reserve Bank last year introduced a new lending benchmark, known as the marginal cost of funds-based lending rate (MCLR). The new lending benchmark replaced the previous base rate system which was operational since 2010. Prior to that, banks lent to customers using the Benchmark Prime Lending Rate (BPLR) system. These changes in lending benchmark were primarily meant to make sure borrowers were able to gain from policy changes announced by the central bank from periodically—the RBI announces changes in its monetary policy once in every two months. Quite like its predecessors, the MCLR system failed to help consumers.

“The experience with the MCLR system introduced in April 2016 for improving monetary transmission has not been entirely satisfactory,” RBI Deputy Governor Viral Acharya told media after the RBI announced its third bi-monthly monetary policy review for 2017-18 on August 2.

It is also worth mentioning here that both the base rate system and the MCLR benchmark are not in line with global practices loan pricing.

What’s new?

The panel has also recommended that a new external lending benchmark is put in place to ensure banks pass on the benefits they receive policy changes to borrowers. The panel proposes that lending rates could be tied to three lending benchmarks to improve policy transmission. These include Treasury Bill Rate, Certificate of Deposit Rate and RBI’s policy repo rate.  Deposits would also be linked to one of these three benchmarks.

Between September 2016 and 2017, overnight MCLR rates have come down to 8.10 per cent from 9.15 per cent. In the same period, 91-day treasury bill rates have fallen to  6.11 per cent from 6.52 per cent while the repo rate has come down to 6 per cent from 6.5 per cent.

“We think that the internal benchmark such as the base rate or MCLR seems to give banks a very high amount of discretion. A lot of factors give them the flexibility to keep lending rates high even if the monetary policy rates are going down and are on (an) accommodative path,” Acharya told media after the fourth bi-monthly monetary policy was announced on October 4.

“To address this, we think it’s time to move to what most countries follow — to have these rates tied to external benchmarks, which will create transparency for borrowers. They can just compare two loans and see which is at a lower spread because the benchmark would be the same,” Acharya added.

The RBI panel has also recommended that as against the current system of annual reset of interest rates, rates be reset every quarter.  Financial institutions would have the freedom to decide on the spread over the external benchmark. However, this spread would be fixed through the term of the loan, the report said.

The committee report has proposed that all borrowers be migrated to the new system by March 2019 without a switchover fee. It is worth mentioning here that a large number of existing borrowers still have their loans linked to the previous base rate regime.

 

Cabinet approves the increase in carpet area for interest subsidy under the CLSS for the middle income group under PMAY.

Cabinet approves the increase in carpet area for interest subsidy under the CLSS for the middle income group under PMAY.

The Cabinet has appproved the increase in the carpet area of houses eligible for interest subsidy under the credit linked subsidy scheme for the middle income group under Pradhan Mantri Awas Yojana (PMAY). The interest subsidy has been in force since January 1, 2017 pursuant to the PM Modi’s address on December 31, 2016 announcing increased benefits for poor people availing housing loans, and a new interest subsidy scheme for housing loans for the Middle Income Group (MIG).

Five things to know about the new rules announced under Pradhan Mantri Awas Yojana (PMAY)

1) After the latest amendment is incorporated, carpet area will be increased in the middle income group (MIG-I) category of credit linked subsidy scheme (CLSS) from the existing 90 square metre to up to 120 square metre.

2) In respect of the middle income group (MIG) II category of credit linked subsidy scheme, Carpet area will be raised from the existing 110 square metre to up to 150 square metre.

3) The CLSS for MIG covers two income segments in the MIG, including Rs. 6 lakh to Rs. 12 lakh (MIG-I) and Rs. 12 lakh to Rs. 18 lakh (MIG-II) per annum.

4) In the middle income group 1 category, an interest subsidy of 4% is allowed for loan amounts up to Rs. 9 lakh while in the middle income group 2 category an interest subsidy of 3% is allowed for loan amount of Rs. 12 lakh. Housing loans above 9 lakh and 12 lakh will be at non-subsidized rates.

5) The interest subsidy will be calculated at 9% NPV over maximum loan tenure of 20 years or the actual tenure, whichever is lesser.

Going For A Property Visit? Don’t Forget To Carry This Checklist

Going For A Property Visit? Don’t Forget To Carry This Checklist

Mohit Gurung, 38, bought a property is Siliguri but two months later he started finding faults in it. At home, electronic boards were all shaky, in the society powers cuts were more of a norm than an incident, and outside, roads were in real poor condition. During the site visit, Mr Gurung only focused on the location and price of the property. This is where he went wrong.

Before you go for a property site visit, here is a checklist you should be carrying with you (take a printout of this comprehensive house visit checklist for beginners):

Construction quality: Check for the ceilings, flooring, and other hardware. See if there are any leaks or damp corners.

Interiors: If you are visiting a furnished property, see whether the interiors, including kitchen cabinets, almirah and sanitaryware, is of good quality.

Building approvals: In case of a housing society, check for all the approvals including fire safety, security and even construction approval certificates are available.

Elevators: Check how quick the elevators are and how secure they are from the inside. They should have an emergency phone, an emergency alarm and if in a premium society should have a liftman, too. All these services should be available.

Security measures: Keep a keen eye on the security measures taken in the society. This includes security cameras, security guard and intercom facility. Ensure that these are operational and maintenance is up to the mark. Check with the neighbours if there have been any break-ins in the society.

Power backup: Make sure that a power back-up facility is available in case of an emergency.

Plumbing and wiring: Check that all plumbing and wiring is well connected and in working condition. To give a thorough check, switch on all the electricity buttons and turn on taps to check the supply.

Phone signals: This is very important. There can be locations where your operator’s signals are not available. So, make sure you are getting proper signals for both calling and internet services.

Sunlight: Enter every possible nook and corner and see how much daylight do they get to soak in. By spending some time here, you will also be able to figure out if the walls are too thin and all sorts of voices enter the premises.

Weather check: All properties look good when the weather is fair. Do not forget to pay a visit when it might be raining. This would give you a clear idea about how effectively the neighbourhood is equipped to handle water accumulated during the rainy season.

Take an expert: If you take a property inspector along with you, they will help you have a clearer understanding on the viability of the property. An expert is more likely to catch points that might not be obvious to a lay man’s eye.

Do not forget to take photos: This is a must. Pictures will help you compare properties with one another when you are back home and are about to take a final decision.

Always call a property expert before taking a decision. Call GFS Realtors on 99330 22222 or visit www.siliguriproperties.com

 

TOP 10 FREQUENTLY ASKED QUESTIONS ABOUT GST ON REAL ESTATE

TOP 10 FREQUENTLY ASKED QUESTIONS ABOUT GST ON REAL ESTATE

Although GST seems like a move in the right direction as far as the “One Nation, One Tax” structure goes it does bring with it a whole host of questions.

These are some of the frequently asked questions that we get from home buyers and customers who are concerned about how GST will impact their properties and investments.

1: How will GST affect the prices of homes since the tax applies to all supplementary items?

A: Although the GST is a new TAX regime the rates on taxes are similar to those applied previously with VAT and Service tax. There will be a marginal up/down on the prices of homes but the value derived from the credit available should off put the increase in prices

2: How will GST effect Home Loan EMIs?

A: Since Home Loans come under financial services and there is a tax of 18% levied on them EMIs are going to go up. There will be other benefits from the government that should provide some breathing space to home owners though.

3: What would be the impact of the GST on property rentals?

A: There will be an increase in tax rate on the input side. So the tax rates will increase.  

4: Will I have to pay tax on the entire amount even if I have only a few EMIs to go?

A: No, as the relevant tax would have been incorporated by the developer, at the time of receipt of the payment or issue of the demand letter for payment.

5: Is it true that under-construction properties will be costlier, compared to ready-to-move-in properties?

A: Buildings which have not received their first occupancy certificate or that are still under constructions will be charged a GST at the rate of 12%. Hence under construction properties will be more expensive.

6: What will be the impact of GST on resale properties?

A:  Resale properties will not be considered as “goods” as far as GST is concerned since it is an immovable property. There will not impact on such properties in the next GST regime.

7: Do Businessmen have the ability to avail input credit for GST while buying an office?

A: Since an office will be considered as an immovable property, there will be no GST applied. Since there is no GST there is no option of availing input credits.

8: Why would a developer pass on the GST benefits to home buyers, when they can increase their profit margin by retaining the benefits?

A: It has been strictly mentioned in the Section 171 of the CGST Act 2017 that the developers will have to pass on the benefits of the GST to the buyers. This is called as the anti-profiteering clause. So instead of keeping the benefits, the developers will most likely give them revised prices. How there will be a check on this point is still to be known.

9: Will the GST impact the stamp duty on buying a property? What about registration charges, maintenance charges, etc.?

A: Apartment owners will have to pay about 2.5 per cent additional tax on the maintenance charges. This tax will be applicable on flat owners, who pay maintenance charges of above Rs 5,000, excluding property tax, stamp duty, water charges and electricity charges.

10: What will be the overall increase or decrease in property prices, once the GST is implemented?

A: Ideally since the builders will get an input credit for all the items they use in lieu of their tax liabilities they should be passing these benefits to the end customer and the home prices should come down in the long run. The situation is still being monitored.

 

The numerous queries related to GST in the real estate Sector, are likely to be answered gradually over time, as people get more acquainted with the new tax law. Although the GST may cause a marginal rise in prices in certain segments of the property market in the short term, in the long run, this tax regime is expected to be a game changer that will boost the growth of the real estate Industry.

Property Rights and HUF (Hindu Undivided Family) !!

Property Rights and HUF (Hindu Undivided Family) !!

 

It is painful to see a large chunk of your income go as taxes. You try every trick in the book to save much as possible. Among the many popular tax-saving exercises is the formation of a Hindu Undivided Family (HUF) by people belonging to the faiths of Hinduism, Sikhism, Jainism and Buddhism.

Before we move forward let us quickly understand what an HUF is. An HUF consists of a common ancestor and all of his lineal male children together with their spouses and spinster daughters. This means Ram, his wife Sita, their unmarried daughter Rama, their married son Rahul and his wife Rajni can together form an HUF. Rama would become a part of the HUF of her husband’s family once she gets married. At the same time, she would remain part of her father’s HUF.

Because an HUF is taxed separately from its members, it can claim deductions and exemptions under various sections of the Income Tax Act. As a combined entity, member benefits greatly if the HUF is registered and reports its income as a separate taxpayer. In fact, members will find banks more welcoming in case they are approached for a home loan, etc.

However, members an HUF also have to face certain restrictions.

Your share is constantly diluting

Each member has an equal right to the property owned by an HUF. This means the said property cannot be sold without having each member of the family on board.  New members that get added to the family by way of birth or marriage also have an equal share in the property. In fact, even an unborn child, who is still in the womb of its mother, has a right to the property.

This means the share of the existing members keeps diluting with new additions. While all goes well till there are no disagreements among members, matters might go out of hand in case of any discontent arises. By its very nature, an HUF is an ever-increasing entity as new members keep getting added. In such a scenario, managing the family and its finances might get quite complex.

Separation may turn ugly

In case there is disagreement among the members of an HUF and they decide to part way, they will have to dissolve the entity through a legal process known as a partition. Cases lying with courts across India testify partition process often goes ugly.

It must be noted here that once an HUF is formed it has to keep filing income tax returns until the time it is partitioned. When an HUF is dissolved, assets held by it are sold to be equally divided among all members. Now, each member will have to pay taxes on the profit thus made; the law perceives this gain as their individual income. Even if a new HUF is formed by married people who have exited the previous HUF, the income of the property would be taxed in the hands of new HUF.

How Fulfilling Is It To Become A Young House-Owner?

How Fulfilling Is It To Become A Young House-Owner?

 

 

 

 

 

 

 

 

YOUNG WORKING MEN AND WOMEN ARE A MAJORITY OF HOME BUYERS NOWADAYS AT SILIGURI !!

Gone are the days when people used to exhaust their lifetime’s savings and buy homes in all-cash deals towards the dusk of their lives. Back then, taking a loan to finance property purchase was unheard of. By comparison, young working men and women today are a majority of home buyers every year. To become homeowners, people now don’t have to wait till they grow old; easy availability of home loans in the market has done the trick. If one has the means and the inclination to own a house, who wants to live in a rented accommodation, anyway?  These were the thoughts that drove Sumit Shah, 29, an employee at a leading Bank at Siliguri, to book a 2BHK house in an upcoming housing complex. Shah patiently paid rent as well as the EMIs (equated monthly installments) till the time he did not get the possession. He argued with himself that he is saving a lot of money by availing of tax benefits on his home loan interest every time doubts started clouding his head over the viability of the purchase.  He was a homeowner, Shah would remind himself. He would also remind himself of all the troubles his father Jamuna Lal Shah faced because his and his family had to shuttle between rented accommodations throughout his working career.

Homebuyers these days compare the beauty of being a young home owner with the trouble of living in rented houses throughout their lives. The conspicuous benefits are enough to invest in real estate, without giving much thought to the fact that the hurry is going to cost them dear. No doubt, the joy of living in your home is matchless. But, the flip side is that you have to be mentally prepared to spend a large part of your life, including the youth, under debt. Also, remember that the house still becomes yours only at the end of your 20- or 30-year loan tenure, when you have repaid every penny you owe your bank.

Another aspect to remember is that by the time you become an owner of, say, a 2-BHK unit in a highrise, you might start finding it increasingly difficult to live in an urban set-up. The traffic on the road and elevators in your building might give you discomfort. It is possible that as an older person you would want to have a home in a comparatively small city.

While it is good to own a house at any point in life, it is advisable that one thinks long-term before any investment that has so many financial and sentimental values attached. You should consider all the pros and cons of living in the place where you are buying the property, the features of the property itself, the amount that the property is going to cost you, and then take an informed call.

Visit www.siliguriproperties.com for the best properties at Siliguri or call 99330 22222

10 Things To Keep In Mind If You Are Going To Transfer Sale Proceeds Of One Property Into Another

10 Things To Keep In Mind If You Are Going To Transfer Sale Proceeds Of One Property Into Another

 

 

 

 

 

 

 

 

 

Are you planning to sell your property? Well, the profit you earn through the transaction is taxable. Under Indian tax laws, gains arising out of the transfer of a capital asset, which among other things includes property, are taxable under the head “capital gains”. Depending on the period for which the asset is held, the gains could either be taxed under the short-term capital gains (STCG) head or the long-term capital gains (LTCG) head.

Do note here that under the current norms, long-term capital gains are taxed at 20 per cent, plus surcharge and education cess, and short-term gains are taxed at 15 per cent, plus surcharge and education cess.

However, if you plan to use the proceeds of the sale of your old residential property in acquiring another residential property, Section 54 of the Income Tax (I-T) Act saves you from paying the capital gains tax. Also, under Section 54F of the Act, a seller can be exempted from paying LTCG tax even if the saleable property is non-residential, and the profit gained so is being used to buy a residential property.

Now, let us look at what are the terms and conditions to avail of the benefits under Section 54:

The eligibility

To avail of the benefit under this Section, the seller has to be an individual or HUF (Hindu Undivided Family). An HUF includes all members of a family, including the extended family members. Apart from Hindus, HUF laws also cover Jains, Sikhs and Buddhists.

The holding period

The property you sold should be a residential asset and should have been held by you for a long term. In case if you hold the property only for a short-term, you will not be eligible to avail of the benefits. From the assessment year 2018-19, the period of holding, in case of immovable property is reduced from 36 months (three years) to 24 months (two years), to qualify as a long-term capital asset.

Purchase of the new asset

Another condition that you have to fulfill to avail of the benefits under this Section is to buy the new property one year before the sale of the old one or within two years the sale of the old property. In case you are planning to construct a house on your own, the undertaking must be carried out within three years from the date of transfer of your old property.

Compulsory acquisition

In case of compulsory acquisition, the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional).

The number cap

Effective from assessment year 2015-16, exemption under Section 56 can be claimed only in respect of one residential house property purchased/constructed in India. If more than one house is purchased or constructed, exemption under Section 54 will be available for one property only.

Within boundaries

What if you bought a property outside India using the sale proceeds of a property that you held in India? No exemption can be claimed for the house purchased outside India.

The amount

Now, what is the amount of exemption provided under the Section? The lower of following amounts will be exempted:

  • The amount of capital gains arising on transfer of residential house; or
  • The amount invested in purchase/construction of new residential house property.

Suppose you sold your old property for Rs 10 lakh, earning capital gains of Rs 1 lakh. Now, if you invest Rs 80,000 of this amount in the purchase of a new property, the exemption under Section 54 will be Rs 80,000 while the reaming Rs 20,000 of the gains would be taxable.

Holding again

What if you are unhappy with the new property and want to sell it soon enough? In such a scenario, you will have to let go of the exemption you claimed. According to the law, the benefit granted under Section 54 will be withdrawn if you transfer the new house within a period of three years from the date of acquisition.

The scheme

The Act further says that if the capital gains arising on transfer of the house are not utilised, in whole or in part to purchase another house till the date of filing the income tax returns, the benefit of exemption can be availed of by depositing the unutilised amount in Capital Gains Deposit Account Scheme. This provision has come into force with the enactment of the Gains Deposit Accounts Scheme, 1988. You can approach any branch of a public sector bank to deposit this amount. The new house can be purchased or constructed by withdrawing the amount from the account within the specified time-limit of two or three, as the case may be.

The unused amount

In case the amount lying in Capital Gains Account Scheme account is not utilised within a specified period, the unutilised amount, for which exemption is claimed, will be taxed as income by way of long-term capital gains of the year in which the specified period ends.

As RERA Resets Indian Real Estate, Homebuyers Get Ready To Be Treated Like King

As RERA Resets Indian Real Estate, Homebuyers Get Ready To Be Treated Like King

 

 

 

Are you a homebuyer who has been fence sitting for long now, thinking about various aspects such as quality of the project or the legality of the land or the price, among others? Let us tell you that the recently-implemented Real Estate Law has reset the way developers and homebuyers have been operating in the market. Although too early to review, the developers have already started to conform to the new rules and there are layers of checks and balances that they know they must resort to. Similarly, sales too, have redefined itself. While pre-launches and soft launches have gone away for a greater good, the developer is now keen to please the homebuyer.

How does the developer gain?

Brand management is important for all developers, both big and small, given the reach of the Internet, social media and general awareness with respect to rights and duties a homebuyer has. All this together equips them to make the right decision. Hence, the Law and the Real Estate Regulatory Authority (RERA) ensure that a defaulting developer cannot escape without adequate punishment/penalty. Every developer will be at the risk of losing his standing in the market.

How does the homebuyer gain?

The Law is a win-win for both genuine developers and homebuyers but when you look at it closely, it is evident that latter is better placed than any other stakeholder. Consider the following sales strategies that a developer would align his company with to ensure a homebuyer gets back to him and at a cost that doesn’t pinch either of them.

Focus is on one

Experts suggest that developers have begun to focus on one or two projects at a given time. This practice is expected to ensure that their cash flows are dedicated for the construction of a project than diverting it to launching multiple new projects. Home buyers can now expect a better focus on quality and timely completion.

Stock receding

The large volumes of unsold stock have been a pain point not just for developers but for homebuyers, too. Therefore, sales teams across the offices of various developers are trying to tune down their inventory overhang from that of six to eight quarters to four to five quarters. This will ensure that the right balance of demand and supply is maintained.

Changing pricing strategies

The developer understands that their focus cannot be solely on the price or the profit, especially when the market is striving hard to recover. The focus now should be on the sales even if the prospective buyer asks for a certain bit of discount. And the key challenge for the sales teams remains to bring the potential buyer to the table for a talk and negotiation. Homebuyers, be assured that attractive discounts are not far away.

You are in the limelight

Yes, with the RERA around, a prospective homebuyer will enjoy the limelight. This is primarily because end-users are more active in the market today and the short-term investor class realises that there is practically no income to be made by flipping properties. Therefore, only end-users and long-term investors would be eying a property purchase and when the head count is less, there would be every attempt to tap this investing class. Anyway, unsold stock doesn’t translate into money for a developer, sales at a little less margin surely do.

More personalised meetings

Have you been complaining that you never get to speak to the sales team one on one after you seal the deal? Not anymore! Call it hand-holding but firms are going to make sure that they walk you through the entire home-buying process. Well, sales teams would bring the market to you through various channels like social media – Facebook, Twitter, Instagram etc. The bait would be the right pricing and the right location. Care would be taken to give the right explanations to homebuyers who are hunting for the right home. They realise your value not just as a customer but also as someone who can refer this project to another potential customer. You would be their way of indirect brand building, too.

 

For more info on RERA, you may call 97330 95555 or email info@gfsrealtors.com to GFS Realtors.

GFS awarded the Best Real Estate Marketing Company (Tier II & III Cities)

GFS awarded the Best Real Estate Marketing Company (Tier II & III Cities)

GFS Realtors and Siliguriproperties.com, a Real Estate Marketing Company of Siliguri were awarded as the “Best Real Estate Marketing Company and Consultants (Tier II & III Cities)” at an event organised by World Wide Achievers in association with ZEE Business (Media Partner) called the “Realty Business Leaders Awards-2017”.

The event was held at Hotel Leela Mumbai and has Shri Sahanwaz Hussain, Shri Suresh Prabhu(Union Minister) and Shri Kalraj Mishra(Union Minister) as Chief Guest. The Award was presented by Shri Shanwaz Hussain, Shri Annu Kappor (TV Actor) and Shri Rakesh Bedi (TV Actor) at a fan fare program where people from all over India were awarded during the event.

The event will be covered by ZEE Business in the coming week.

Shri Rajesh Goyal, director of GFS Realtors received the awards on behalf of the company. It is a matter of great pride for entire Siliguri that a company from a small place like Siliguri has been awarded such a award at National Level.  GFS Realtors provides Real Estate Service at Siliguri and entire Eastern India. It is also a part of CREDAI North Bengal and NAR India.

Siliguriproperties.com is the only realestate portal of this region which provides complete realestate solution online. It is one of the most popular websites in real estate in Eastern India. GFS Realtors is the most popular Real Estate Company among the Builders & Property Buyers and Sellers in the region.

Is it time for High End Residential Complexes in Siliguri ?

Is it time for High End Residential Complexes in Siliguri ?

Siliguri now needs development of Good High End Residential Housing Complexes !!- GFS Realtors

The Focus everywhere has been on Affordable housing and we see that most of the Builders and developers across the country and rushing towards Launching affordable housing..Just reading and listening on news is making everyone run the rat race. And so is Siliguri..

What everyone is missing out is the dearth of high end residential accommodation in Siliguri. Over the years Siliguri has seen the development of periphery Location in terms of Mid Segment flats. But not many of the builders have tried their hands at developing high end Residential Complex in the periphery of the City.

What is interesting is the fact that success has been achieved in the mid segment flats in places like Champasari, Salbari, Matigara, Kadamtala, Salugara, etc and now builders are planning mid segment flats also in the heart of the city like Jyoti Nagar, Punjabi Para, Bhanu Nagar, Near Nirmala School, etc.

The result has been lot of options in that Segment but very few option in the High End Flat Segment. Siliguri was mostly concentrated for high end flats about 7-8 years back and saw the development of Residential Flats Like Club Town, Model Town, Green Valley, Uttorayon, Green Vista, etc and all turned out to be out and out successful.

Currently the Focus has shifted mostly to Mid Segment Flats. Due to Lack of development of good apartments people are slowly shifting and thinking about own house development and same has led to spurt in development in locations like “uttorayon”.

What needs to be understood is that Siliguri still has a high potential in High End Apartment Segment. Any new Project coming up in that Segment, if it can be built with good Vaastu orientation than it assures to be a great Success.

SBI has yesterday made Home loans above 75 Lakhs further Cheaper. The Prices in Siliguri are still around Rs. 3000 per Sq. ft and have full potential to touch the Rs. 4000 per Sq. Ft rate in the days to come. RERA would also ensure that only serious players with good track record and ability to deliver quality would sustain. GST Promises to make things more transparent.

Its time for Builders to think on the line of developing High End Residential Complex with latest Amenities both within the Town and also in the periphery. If People in the Mid Segment can meet the challenge of staying in the periphery than the people in the High end Segment can Surely do it..

Are the Siliguri Builders ready to take the opportunity.. Definitely Yes !!!

CA. Sanjay Goyal, GFS Realtors, Siliguri.

GST and its Impact on Developers !

GST and its Impact on Developers !

CA. Sanjay Goyal

GST and Its Impact on Real Estate Sector

The Goods and Services Tax (GST) is beyond doubt the most revolutionary tax-related reform to be seen in India in several decades, since it will eliminate the conflicting and cascading taxation structures which have confounded several industries over the past few decades. It will most certainly have a profound effect on India’s economic prospects. Everyone if looking forward to the implementation of the Goods and Service Tax (GST). The 12% GST rate is welcomed by Industry. RERA is moving in the right direction to ensure transparency in the realty sector. GST and RERA collectively are expected to free homebuyers and investors from a lot of hassle. Above all, it will free them from the double taxation impact and thus, GST is being welcomed by the industry as well as other stakeholders. After RERA, the next thing everybody is looking forward to is the Goods and Services Tax which is Set to get implemented on 1st July 2017, GST will have an impact on the cost of various commodities.

What is more important is to see how the Builders and developers shall pass on the benefit of the Input Credit received under the GST regime. Its is feared that some builders may just charge 12% to the buyers and fail to pass on the benefit of Input Credit that they are receiving on Input material for the under-construction projects as on the proposed date of Implementation of GST, i.e 01st July, 2017.

Let us consider some important points –

GST Impact on Developer/Builders :

  1. Under GST, a developer can claim maximum credit and he would be paying for the finished product.
  2. The developer will need to pay only differential tax liability to the Government body. The cash component will cut down as products will have to be sourced from registered vendors to get input tax credits.
  3. GST is also expected to boost foreign investment and benefit the NRI community. With the availability of the seamless and all-inclusive channel, transacting in Real Estate will become easier for them.
  4. GST rates will also reduce the cost of production for the builders. Since the cost will be low, builders will be able to pass a part of the benefit to the buyers. The completion of housing project depends on a lot of allied industries like cement, steel, etc. A lowered GST rate of 18 per cent will offer a huge benefit in reducing the overall construction cost.
  5. While it is difficult to comment exactly on which type of projects will have more impact, as GST may vary for different project type. To avoid any confusion, the developers should study the GST impact analysis and understand the GST system and implications.
  6. Many experts also feel that the entire chain of real estate transactions, including sale of land should be bought under the GST.

GST Impact on home prices:

  1. While the Real estate sector was heavily taxed earlier, the single 12% GST rate is welcomed. Industry experts feel that the actual tax impact under GST would match, or be lower than the existing multiple indirect taxes on the sector.
  2. We are still waiting for more clarity on the applicability or continued exemption for Affordable Housing under the GST.
  3. If the profit margins of the developers get impacted, the profit margins for the buyer will increase. As the taxes will be low, the prices will automatically come down. Moreover, with GST all the other taxes, which buyers pay indirectly to the developers, will also be eliminated.
  4. Different segments will be impacted differently. Just for an example, for the luxury segment, since the taxes are kept higher, so an individual may have to pay a higher tax because of the higher-costing product used. At the same time, in such premium segments, there are a number of factors that care of it. So overall, it looks like there will be a fair play and impact on all the governing forces.
  5. With all the taxes coming down into a single consolidated tax, the double taxation practice will abolish. It will have a cascading effect on the inflated prices for end users.

A single indirect tax which covers all goods and services will, in the long run, increase tax collection by making it easier for retailers and several other businesses to comply and also moderate overall taxation levels. That said, it should be remembered that the favourable effects of this new taxation regime will become evident only within 2-3 years of its implementation.
RERA has already set the ball rolling and developers are running back and forth to understand the overall implications of the Act. The same will be the case with GST. We need to understand that India has been looking for such regulations and statutory environment for quite a long time now. The earlier we embrace these regulations, the better it will be. Everyone sooner or later has to get accustomed to the new ways of working, both in real estate and taxation. As we prepare for GST and how it will work, the reduction of multiple indirect taxes and minimization of the scope for double taxation is a reason for home buyers to cheer!!

Regards

CA. Sanjay Goyal (Chartered Accountant), Partner- M/s Anand Sanjay & Associates, SIliguri

Top ten tips to keep in mind while taking a home loan- LOANBAGS

Top ten tips to keep in mind while taking a home loan- LOANBAGS

Taking a House is once in a life time decision for many of us with the spiraling prices of the property and the high interest rate regime in the market. Thus, selecting the right home loan product in the market becomes much more important for many of us to avoid any surprises later.

What are the right things Mr. Right did? Read on to learn a few useful tips from him.

  1. Good research: Do not go as per what your loan agent says. You do your own research of the best terms available in the market. Take advice of a reliable Loan Adviser to know what suits you the best.
  2. Spend conservatively: keep a tab on your spends during the home loan tenure. The old adage “A penny saved is a penny earned,” holds true in case of home loan too. When you save money, you could actually use it to foreclose the loan.
  3. Park your additional funds: A couple of banks have a facility, which allows borrowers to park their additional funds in the loan accounts. This will reduce the interest proportionately from the principal amount for the time that the amount was parked. This is an interesting option.
  4. Learn what is floating or fixed rates: there are two types of interest rates that banks offer: floating and fixed interests. Floating interest rate is linked to market. It moves in tandem with a base rate.  Where as fixed interest remains fixed for a few months defined in the loan agreement. It is important to understand that in most cases floating rates work out cheaper than fixed rates in the long run.
  5. CIBIL Score : It is important to have a score of 750 plus to get attractive rate of interest on your Home loan. Cibil data indicate that 80% of the home loan approvals are given to customer who have a credit score of 750 plus. Low Cibil score could possibly reject your Home loan application or you may have to pay a higher interest rate.
  6. Understand foreclosure norms: Recently, RBI banned foreclosure penalties. So make sure you do not pay anything extra while foreclosing your loan.
  7. Save up to foreclose: if you can save Rs 1 lakh in the current fiscal, do not use it on a dream holiday abroad. Instead use it to foreclose your loan. My advice to every borrower is that learn to foreclose your loan as soon as possible. The sooner you free the amount you pay for equitable monthly installments (EMI), the earlier can you enjoy the freedom to spend that money on luxuries of life.
  8. Compare processing fees: whether it is for a fresh loan or for a balance transfer. Enquire in all the banks before you finalise.
  9. Read the documents: read everything written in the loan agreement before you sign on the dotted line. It is very important to be aware of terms and conditions.
  10. Increase the bridge funding: every borrower has to pay some money from his own pocket while buying a house. Try to pay as much as possible as down payment. This will reduce your interest paid on the principal.
2.5% more tax on a flat’s maintenance charge under GST regime !!

2.5% more tax on a flat’s maintenance charge under GST regime !!

Once the GST regime rolls in on July 1, apartment owners will have to pay about 2.5% additional tax on maintenance charges. The tax is applicable on flat owners who pay a maintenance charge of above Rs 5,000, excluding property tax, stamp duty, and electricity and water charges.

Under GST, the existing rate of 15.55% on maintenance charges will be replaced by 18%. The new rate is also applicable on housing societies that have an annual corpus or balance of more than Rs 20 lakh, again, excluding property tax, stamp duty, and electricity and water charges, and also maintenance charges gathered from apartment owners.

GST and its impact of Real Estate !!

GST and its impact of Real Estate !!

The GST rates have been announced and government has fixed 12 per cent for work contract while cement has been put in 28 per cent tax slab from earlier 23-24 per cent in the current tax regime.

Full availability of input tax credit and elimination of multiple indirect taxes will step-up a positive sentiment in the real estate sector. Industry experts said benefits of input tax credit on raw materials will negate the impact of putting cement in the highest tax slab of 28 per cent. Earlier the Credit in Input Tax Credit was not allowed to the Sector which was taxed in terms of Service Tax with abatement.

The full availability of input credit as compared to current regime is expected to be beneficial for reducing project costs under the GST system for the Real Estate Builders and Developers. Under GST regime entire input credit is allowed to the real estate sector. This should also incentivise the people to come within the tax net and rationalise the Market.

However a few things are not yet clear and the same would surely become more clear in the days to come with more clarity being issued by the Government.

The REAL ESTATE sector is already witnessing the reforms in terms of the introduction of RERA. Furter GST would be very helpful for the organised Sector and also bring in more transparency into the Sector. With more transperency will come more trust and should be very helpful for the Industry in the near future.

The Real Estate Sector is looking positively towards the GST. Hope in Years to come the Stamp duty would also come within the GST and make things more clear and affordable.

 

Plot promoters to also face action under RERA !!

Plot promoters to also face action under RERA !!

Union urban development minister M Venkaiah Naidu warned last week of penal action against realtors dishonouring their promises. But it’s not just builders who face punitive measures under the new Real Estate (Regulation and Development) Act. The ambitious legislation, which came into effect on May 1 across the country, also deals with plot promoters. The act is yet to be enacted in West Bengal as the state government has not ratified the draft rules.

The act refers to a plot promoter as “a person, who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in a project, whether with or without structures thereon.” This apart, real estate agents who facilitate sale or purchase of plots, marketed by promoters are also under the purview of the act. Like builders, plot promoters also must register their layouts with the real estate regulatory authority before launching their projects in the market.

Realtors said that including plot promoters would ensure that they do not deviate from assured amenities. About 45% of the total land for a proposed layout must be earmarked for facilities such as roads and Open Space Reservation (OSR) to obtain approval from planning authorities, while the rest can be developed as plots. Former president of Tamil Nadu chapter of Confederation of Real Estate Developers Associations of India (CREDAI) N Nandakumar said that many plot promoters offer attractive facilities to woo customers, but fail to deliver. “For instance, some promise black-topped road, though buyers end up with gravel pathways. A few even offer to plant saplings and nothing would be available in reality,” he said. Nandakumar notes that a section of plot promoters seldom adheres to the development regulations with much of the space earmarked for common amenities being diverted for other commercial purposes. “Against this backdrop, RERA can play an effective role as the promoters should provide the amenities assured to buyers,” he added.

The act clearly states that defaulting promoters shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further 10% of the estimated cost of the project or with both.

RERA will also open a window to access complete details about real estate projects. That details on all projects registered with RERA will be available in an exclusive portal. to be created by the authority. It (web portal) “It will be a great tool for understating a project ahead of buying a property.

Here’s why West Bengal failed to ratify RERA on time ?

Here’s why West Bengal failed to ratify RERA on time ?

The Real Estate Act (RERA) comes into forcewith an objective of safeguarding the interests of buyers across the country. However, West Bengal is one of the states that failed to officially implement RERA.

The Housing Minister of West Bengal and Mayor of Kolkata Municipal, Sovan Chaterjee spoke exclusively to India Today and talked about RERA.

Chaterjee said, “It is not an easy job to implement the RERA in the state of West Bengal because of the environment and other factors that are changing rapidly. It involves a lot of complexity. We are not overruling the RERA system but taking their advice and regulations into consideration. We are also examining the details of the issue and diversely discussing the matter with the concerned agents.”

The minister added, “Many criterion are given in the draft’s agenda but it is not possible to apply all on the ground work. That is why different processes need to be adapted and revised. We are working on it and then finally we can go through the actual process of RERA.”

HERE IS WHAT YOU NEED TO KNOW ABOUT RERA
The Real Estate Regulation and Development Act is expected to bring transparency and accountability in the realty sector and ensure consumers will not be cheated or taken for a ride by the developers. The act will also ensure that consumers won’t have to endure late deliveries

Objective of RERA is not to pressurise developers, but to safeguard interests of buyers by ensuring they don’t get cheated.

Source : News bytes

CBDT issues draft ICDS on real estate !!

CBDT issues draft ICDS on real estate !!

The Central Board of Direct Taxes (CBDT) on Thursday released the draft Income Computation and Disclosure Standard (ICDS) on real estate transactions for public consultation. The proposed ICDS will be applicable for determination of income from all forms of transactions in real estate, including land and buildings.
The draft ICDS doesn’t mandate obtaining all critical approvals for revenue recognition after the Real Estate (Regulation and Development) Act, 2016, (RERA), came into effect. It also proposes recognition of transferable development rights (TDR) at the fair value against fair market value or net book value as per the guidance note prepared by the Institute of Chartered Accountants of India (ICAI).

The transactions will include sale of plots of land (including long-term sale type leases) with or without any developments, development and sale of residential and commercial units, row houses, independent houses, with or without an undivided share in land. He added that acquisition, utilisation and transfer of development rights, redevelopment of existing buildings and structures and joint development agreements for any of the above activities will also be included.

Further, the proposed ICDS does away with the ceiling for revenue recognition based on stage of completion determined with reference to the project cost incurred. The draft is based on the guidance note issued on real estate transactions issued by ICAI with certain modifications as suggested by the government’s ICDS committee.

The specific ICDS on real estate transactions shall be a welcome move as it will bring clarity and certainty in application of provisions of ICDS and computation of taxable income to the sector. It can be expected that in near future ICDS will be issued for other specific sectors where application of ICDS III & IV on income is unclear.

The draft ICDS has made changes in five areas compared to the guidance note. These areas are definition of project and project cost, revenue recognition, application of percentage of completion method (POCM) for real estate projects and transferable development rights (TDRs).

Impact on Siliguri of Carpet Area based pricing under Rera – GFS Realtors

Impact on Siliguri of Carpet Area based pricing under Rera – GFS Realtors

CA Sanjay Goyal

Despite union government’s ardent instruction several states failed to meet the deadline of state real estate rules notification. West Bengal is one of those states, who has yet not finalized their drafts. RERA came into force on May 1, 2017. Central government has extended the time period for another 3 months, which completes on July 1. But sooner or later RERA will be implemented in West Bengal too, and according to that as potential buyers one should know how it would regulate the residential property sale in Kolkata.

The central Real Estate Regulation and Development Act (RERA) has been diluted by several states which have by far notified their state RERA norms. As per RERA developers must upload their project details, step-by-step development process (3 months basis) on RERA official site followed by the personal details of himself. Documents related to the project and land for e.g.- land registration, clearance certificate, title deed everything need to be visible before the potential investors. The unadulterated execution of RERA in Bengal will genuinely push the residential property sale in Siliguri, securing buyers’ interest throughout.

RERA will focus on the carpet area based price for the both commercial and residential properties across the country.

As of now the residential and Commercial property sale in Siliguri has been practicing based on the super-built area, but after May 01, carpet area of the property will be set as a key parameter of the project pricing starting from affordable to ultra luxury projects.

Let’s know about the carpet area based pricing

Any property on Sevoke Road with a super built area of 1500 sq ft in prime location, worth selling price of Rs. 3000 per sq ft, randomly we assume that within this 1500 sq area 1100-1200 sq ft is the carpet area of the very property and the remaining 300-400 sq ft is space is occupied by the walls, staircase, passage, lift etc. With the RERA implementation buyers are likely to pay for only the carpet area of the apartment.

How will it impact realty transaction?

Let’s us tell you property price is not going to fall in the coming years or soon, neither promoters will pay from their pocket for the common shared area of the apartments. Developers will include this price in the selling price of the property and for the eternity buyers will have to pay this cost. This particular execution is only to clarify the confusion of buyers related to super-built and carpet area, as mostly they are seen mixing the both terms and whirled in the trickery of the builders. This process will clarify the ambiguity between buyers and the builders.

Asking about the present status of residential property sale in Siliguri and upcoming RERA implementation in West Bengal, the RERA expert of Siliguri CA Sanjay Goyal said, “The new pricing model will be a uniform platform for both the buyers and the builders. Buyer will be more aware of what they are paying for. Real estate practice will gain its much-awaited trustworthiness, as it’s surely going to strengthen the bond between buyer and seller. Else RERA has legal route for both of them.”

For residential property sale in Siliguri CA Sanjay Goyal added, “RERA implementation is likely to fetch foreign investment and positive investments from reliable sources in the realty sector. But carpet based pricing won’t directly affect the pricing of projects.”

CA Sanjay Goyal further added that “Siliguri is one of those markets which stands out in terms of transperancy and clarity in Real Estate Transactions. So the public faith on Real Estate transactions would further increase with RERA inplementations”.

From the point of view of the Realtors/Agents, he said that this will organise the highly unorganised Real Estate Market in terms of advisors. Currently and more so in the past, builders and Realtors have not given each other the due deserved respect. Now the scenario will change and there will be less instances of misunderstandings too. Hope each one understands the importance and contribution of the other in the Real Estate Industry.

Good Days are Ahead for sure..

 

GST impact the Real estate sector-GFS Realtors

GST impact the Real estate sector-GFS Realtors

The Goods and Services Tax (GST) is beyond doubt the most revolutionary tax-related reform to be seen in India in several decades, since it will eliminate the conflicting and cascading taxation structures which have confounded several industries over the past few decades. It will most certainly have a profound effect on India’s economic prospects.

A single indirect tax which covers all goods and services will, in the long run, increase tax collection by making it easier for retailers and several other businesses to comply and also moderate overall taxation levels. That said, it should be remembered that the favourable effects of this new taxation regime will become evident only within 2-3 years of its implementation.

Though the goods and services tax (GST) tax structure has been announced, there is still a lot of conjecture about which tax rate will be applicable to the real estate and construction industry.

The tax rate is not decided yet and it would be premature to comment on it at this point. The expectations are for real estate to be in the 12% bracket. However, the GST rate is not the only important factor. The abatement rules as applicable under the service tax regime and the input tax credit facility for developers will determine if the effective tax incidence on real estate is lower or higher under GST.

Impact on Residential Real Estate:
If we look at the residential property sector, sales are not just impacted by tax rates but also by sentiment, and also on account of the trust deficit which the Real Estate Regulation & Development Act – or RERA – now seeks to address. That said, if costs do go higher under GST, the lower prevailing current home loan rates could assuage the impact to some extent.

Buyers and investors as well as developers are understandably worried that the final ticket size of homes will increase even if the Government levies GST at 12%, when compared to the existing service tax rates. Developers are still awaiting further clarity on this, but they know that it is in the interest of their business to keep ticket sizes range-bound. Evolving market dynamics have already brought about a change in the manner in which developers work. Staying customer-centric and delivery-focused to create a differentiated identity will be the most logical and likely method for them to adopt.

Impact on Rental Housing
Other doubts pertain to the rental housing market, which would naturally be impacted if the Government were to tax residential leases under GST. The common apprehension is that if this were to happen, the rental housing segment may see a huge slump over the medium-term, since residential leases are currently not taxed at all.

Here, it is pertinent to note that residential leasing is an inherent demand which will not evaporate merely by higher taxes. Certainly, we may be looking at a rental stagnation or marginal decline as the market readjusts to the new dynamics which GST will infuse. However, rental housing demand is sticky and end-user-driven in nature, so we are definitely not looking at a major slump in this segment because of GST even if it does tax residential leases.

Impact on Commercial Real Estate
When it comes to GST’s impact on the commercial office real estate market – with the existing service tax for commercial leases at 15%, GST would be likely neutral overall (at 12% slight savings, and at 18% slight increase).

Impact on Affordable Housing
Affordable housing is currently exempt from service tax. It is likely that the government may come out with a clarification regarding the applicability or continuing exemption under the GST.

Big PEs, NBFCs eye low-cost housing with government incentives- GFS Realtors

Big PEs, NBFCs eye low-cost housing with government incentives- GFS Realtors

Large private equity firms and non-banking finance companies are now getting interested in affordable housing, thanks to the government’s recent incentives for this segment, including infrastructure status and speedy approvals.

So far, this segment was financed by funds with smaller ticket size which specialized only in affordable housing.The government has been pushing affordable housing in its bid to achieve ‘Housing For All by 2022’ and the efforts are showing with money flowing into this segment.

Kotak Realty Fund, that focused more on mid-income housing projects, is now evaluating the affordable home segment. “It is a large market to address. It is a business of low margins and fast turnaround. Hence the approvals need to come fast to convert land quickly into cash flow to make decent returns and the developer should be able to control costs well,” said Vikas Chimakurthy, senior ED, Kotak Realty Fund.

According to JLL India, builders of budget housing now have access to cheaper sources of funds, thanks to the newly-granted infrastructure status. As per statistics, the shortage of housing currently stands at around 1.87 crore homes, and nearly 95% of the shortage is in the affordable segment. Now, developers can and will focus more on launching projects in this segment, where the demand is maximum.

Some investors believe that private equity firms need to deploy a differentiated strategy while investing in affordable housing.

Typically, private equity firms would like to invest in affordable housing on ‘last-in first-out’ basis. Private equity funds can finance lastmile land aggregation and statutory payments for which construction finance is not an option. Private equity funds can take periodic exits through early surplus and the developer can bring in cheaper construction finance lenders with the project up and running.

Interestingly, equity flows have reduced in the residential sector in the past four-five years and made way for largely debt and structured instruments. The relative slowdown that this asset class has seen over the past three-four years has made investors somewhat conservative and made them turn to construction debt, last-mile funding and bundling receivables to ensure that their investments are protected against the lien of the asset.
Source: Newsfeeds

$1.3 trillion housing boom set to be India’s next growth driver- GFS Realtors

$1.3 trillion housing boom set to be India’s next growth driver- GFS Realtors

In a country where slums sit cheek-by-jowl next to palatial luxury—including what’s been reported as the world’s most expensive private home—India’s unhoused may soon become a more potent economic growth driver.

Prime Minister Narendra Modi’s drive to bring homes to the country’s 1.3 billion people, rising incomes and the best affordability in two decades will unleash a $1.3 trillion wave of investment in housing over the next seven years, according to CLSA India Pvt.

The firm expects 60 million new homes to be built between 2018 and 2024, creating about 2 million jobs annually and giving a tailwind of as much as 75 basis points to India’s gross domestic product. The volume of social and affordable housing will rise almost 70% to 10.5 million annually by 2024, exceeding the 33% increase in the premium market.

“The housing sector is at a tipping point and will be the economy’s next big growth driver,” Mumbai-based analyst Mahesh Nandurkar and his colleagues wrote in a note last week. “The catalyst is the government’s big push for an ambitious housing program.”

Modi has been on a mission to expand affordable housing in Asia’s third-largest economy. In February, the government granted affordable-housing builders “infrastructure status,” making them eligible for state incentives, subsidies, tax benefits and institutional funding. In June 2015, it announced a “Housing for All” program which aims to construct 20 million homes across the country and in December it announced rebates and interest waivers for home loans under the program.

That’s not all that’s expected to fan demand. In the past five years, mortgage rates have dropped about 275 basis points to about 8.5%. Prices have remained stable while per-capita incomes have posted a compound annual growth rate of about 10%, according to the CLSA note.

While India’s real estate industry extended a slump after Modi’s sudden decision to ban 86% of the nation’s cash in November, affordable housing was growing the fastest before demonetization and the whole market has shown signs of snapping back.

The report predates the latest reform to regulate India’s notoriously unreliable property developers. Under laws that came into force 1 May 1 construction companies will have to use at least 70% of sale proceeds to complete residential projects, rather than funnel money to other jobs. Developers will also no longer be allowed to start pre-selling apartments before all building approvals are obtained. Those who don’t comply could face as many as three years in jail.

CLSA expects volume growth in new home construction to jump to a compound annual growth rate of about 8% over the next seven years from zero over the past five years.

So while luxury residences like 27-story “Antilia” owned by Reliance Industries Ltd chairman Mukesh D Ambani, and reported to worth anywhere from more than $400 million to over a $1 billion, have hogged Mumbai’s skyline, more affordable options may soon be springing up

SBI cuts home loan rates by 0.25%; offer valid till July 31

SBI cuts home loan rates by 0.25%; offer valid till July 31

Days after government announced implementation of the Real Estate (Regulation and Development) Act, the largest public lender in the country has cut the home laon rates by 25 basis points in a bid to woo homebuyers.

The new lending rates of 8.35 per cent will be applicable for only affordable housing loans which are under Rs 30 lakh.

For male borrowers, the limited period offer is valid till July 31 and the reduction is 20 bps to 8.40 per cent, SBI Managing Director for national banking, Rajnish Kumar said.

The new rate reduction of 25 per cent for women will be for the salaried borrowers and for the non-salaried, it will be 20 bps cut.

Similar will be the rates applicable to male salaried and non-salaried borrowers.

One percentage point is 100 basis points (bps).

This a huge saving for the borrower as the 25 bps reduction translates into a saving of Rs 530 per month on EMIs,” he said.

The new rates will be effective tomorrow.

“This is giant leap to give a fillip to the affordable housing segment keeping the Prime Minister’s vision of providing ‘housing for all’ by 2022,” Kumar said, adding that the lender now offers the lowest rates in the industry.

With a home loan book of Rs 2.23 trillion, SBI leads the segment with 25-26 per cent market share, Kumar said further.

However, he is of the view that the new offer may not push up its market share significantly as 45 per cent of its Rs 2.23 trillion home loan book is under Rs 30 lakh bracket.

6 rules in RERA that will stop builders from delaying delivery of your dream home..

6 rules in RERA that will stop builders from delaying delivery of your dream home..

The delay in possession of their homes has been the biggest concern for the buyers of the real estate properties. For many of the homebuyers, across locations and with almost the builders, the delay has extended to almost six years or more now, with no possession in sight. In the absence of a regulator and with no rules in place, the builder-buyer battle appeared one-sided.

Now, the real estate sector has got its own regulator from May 1, 2017, the date when the Real Estate (Regulation and Development) Act, 2016 (RERA) became effective in the entire country. Each state and UT will have its own Regulatory Authority (RA) which will frame regulations and rules according to the Act.

Let’s see what’s RERA has got in store to ensure timely possession of properties. In respect of the ongoing projects that have not received a completion certificate, the developers have to get them registered too. Once registered, they too will have to follow the rules, regulations of the state RA.

Builders can continue the marketing of their ongoing projects till July 31, 2017 !!

Builders can continue the marketing of their ongoing projects till July 31, 2017 !!

Builders can continue the marketing of their ongoing projects till July 31, 2017, even if they are not registered with the Real Estate Regulatory Authority (RERA). However, no new project can be launched without it being registered with RERA.

Allaying all the speculation, spokesperson of union ministry of housing and urban poverty alleviation (HUPA) said that according to the Real Estate (Regulation and Development) Act (RERA), existing ongoing projects need to file for registration with their respective regulatory authority by July 31. Till then the developers can continue their marketing and other activities like construction and securing the approvals from the existing authorities.

In the next three months, all the legal infrastructure required to implement RERA will be in place, which will enable the developers to register the ongoing projects to apply for registration, the spokesperson said. Only those developers of on-going projects, who do not file for registration of a project with the authority, will have to stop advertising or marketing of the project.

According to the RERA 2016, “Projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the authority for registration of the said project within a period of three months from the date of commencement of this Act.”

However, no new project can be launched till it is registered with the regulator. At the same time, the law has also prohibited any pre-launch marketing of a real estate project.

Clarification on impact of non notification of rules by states like West Bengal would be appreciable

Clarification on impact of non notification of rules by states like West Bengal would be appreciable

CA. Sanjay Goyal (B.COM, FCA)

The Act became effective on 01st of May, incorporating sections on mandatory registration of projects, enhanced responsibilities and obligations of project promoters, as well as penalties that can be imposed for deviation from rules. However many states like our own West Bengal is yet to notify the Rules. There has been a Delay in notification and non-uniformity of the Real Estate (Regulation and Development) Act, 2016 (RERA) across various states, which in turn is likely to dilute implementation and effectiveness of the Act.

Currently a large amount of Confusion exists among the stakeholder as to the steps to be taken by them to comply with the RERA. In West Bengal the State has still not notified the rules, so the Developers and Realtors who intend to register themselves do not know what to do. At the same time, they are also not sure whether they can advertise their projects or work complying with the RERA without registration or wait till the day the state government notifies the Rules. In Siliguri also the big question coming up before the RERA advisers is “What should the Builders do currently if they intend to register the projects immediately and comply with the Act?”, “What would be the fate if the State Government delays the notification of the rules further ?”. “What is the Fault of the person responsible for registration if the state government does not appoint a regulator for the registration ?” and many such similar question.

Since registration with the RERA has been made mandatory for any project to be marketed and sold, further delay in setting up regulatory infrastructure could impact the operations of real estate developers, especially in case of new project launches.

For effective implementation of the provisions, the state governments had to frame rules governing these sections and set up state-level real estate regulatory authorities (RERA) and appellate tribunals to implement the rules. As on date, West Bengal has not yet notified the Rules. The absence of a regulator or appropriate rules can result in a regulatory vacuum and dilution of the Act’s provisions.

The implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), is set to bring about a paradigm shift in the way the real estate industry operates in India. The basic objective of the RERA Act is to protect the interest of consumers through a regulatory regime that improves the transparency level and accountability of real estate developers.

All ongoing projects (which have not received occupancy certificate till date) are also required to apply for registration with the RERA within three months of the Act’s commencement. In this regard, customers may defer their purchasing decision until a project is registered with the RERA, thereby putting pressure on the demand in the near term.  Also it would prevent the marketing, construction and Sales activities of ongoing projects with a fear of penalty for non compliance with the Central Act.

It would be highly desirable that the Centre and state Govt both come out with clarifications at the earliest to resolve this stalemate situation as the economy and a particular Sector largely depends to the Real Estate Sector.

Developers can only advertise projects with Completion Certificate, Occupation Certificate from 01st May, 2017 onwards

Developers can only advertise projects with Completion Certificate, Occupation Certificate from 01st May, 2017 onwards

Developers cannot advertise their under construction projects from May 1 2017, once the Real Estate (Regulation & development) Act (RERA) will come into force across the country from May 1, 2017. However, if they have projects that have already obtained completion and occupancy certificates, those can continue to be advertised and sold.

However, the good news is that many states have already created an interim authority and are ready to receive applications from Builders and agents. This includes Kerala, Maharashtra, Punjab, Rajasthan, Mizoram, Haryana, Delhi, Andaman & Nicobar Islands and Chandigarh.

Many others are in advanced stages of being closed. This includes Orissa, Bihar, Jharkhand, Assam, Tamil Nadu, Andhra Pradesh, Telangana, Tripura, Dadra & Nagar Haveli and Daman & Diu. Once completed the final authority of Andaman & Nicobar Islands will align with that of Tamil Nadu.

RERA is central act, it doesn’t need to be notified by states. It’s only the Ministry of HUPA which notifies the sections etc. However, the states are supposed to make their own rules and set up authorities and tribunals which will function at the state and district levels.

As of Thursday April 27, 2017, 12 states had notified the rules, 18 were in an advanced stage of doing it.

Once it is notified on May1, developers and agents have to conform to the provisions and register themselves with the RERA authority. Explains a ministry source, “Unless the promoters do not register their projects they cannot advertise, whether ongoing or future.” This is in line with Section 3 & 4 of the Act which mandates registration of projects by developers comes into effect from 1st May. These are discussed in more detail below.

Section 3 deals with Registration of real estate projects and agents. It states that:

(1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act:

Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act:

Provided further that if the Authority thinks necessary, in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such project to register with the Authority, and the provisions of this Act or the rules and regulations made thereunder, shall apply to such projects from that stage of registration.

(2) Notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required—

(a) where the area of land proposed to be developed does not exceed five hundred square meters or the number of apartments proposed to be developed does not exceed eight inclusive of all phases: Provided that, if the appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act;

(b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;

(c) for the purpose of renovation or repair or re-development which does not involve marketing, advertising selling or new allotment of any apartment, plot or building, as the case may be, under the real estate project.

Explanation — For the purpose of this section, where the real estate project is to be developed in phases, every such phase shall be considered a stand-alone real estate project, and the promoter shall obtain registration under this Act for each phase separately.

There are some important points to note here.

1) The developer has just 3 months to register the project with the RERA authority.

2) If the project is outside the planned area but is being built with the requisite permissions of the local authority, the promoter can be directed to register that project too, in the interest of the allottees.

3) Projects below 500 sq m or less than 8 units in one development need not register with RERA.

4) Units with Completion Certificate do not need to register

5) Renovation projects that are not being marketed or allotted afresh are exempted

6) Where a project is being developed in Phases, every phase would be considered a stand-alone real estate project

Section 4 deals with registration by developers

(1) Every promoter shall make an application to the Authority for registration of the real estate project in such form, manner, within such time and accompanied by such fee as may be specified by the regulations made by the Authority.

(2) The promoter shall enclose the following documents along with the application referred to in sub-section (1), namely:—

(a) a brief details of his enterprise including its name, registered address, type of enterprise (proprietorship, societies, partnership, companies, competent authority), and the particulars of registration, and the names and photographs of the promoter;

(b) a brief detail of the projects launched by him, in the past five years, whether already completed or being developed, as the case may be, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending; Prior registration of real estate project with Real Estate Regulatory Authority.

(c) an authenticated copy of the approvals and commencement certificate from the competent authority obtained in accordance with the laws as may be applicable for the real estate project mentioned in the application, and where the project is proposed to be developed in phases, an authenticated copy of the approvals and commencement certificate from the competent authority for each of such phases;

(d) the sanctioned plan, layout plan and specifications of the proposed project or the phase thereof, and the whole project as sanctioned by the competent authority;

(e) the plan of development works to be executed in the proposed project and the proposed facilities to be provided thereof including fire fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy;

(f) the location details of the project, with clear demarcation of land dedicated for the project along with its boundaries including the latitude and longitude of the end points of the project;

(g) proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees;

(h) the number, type and the carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas apartment with the apartment, if any;

(i) the number and areas of garage for sale in the project;

(j) the names and addresses of his real estate agents, if any, for the proposed project;

(k) the names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project;

(l) a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorised by the promoter, stating:—

(A) that he has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title, if such land is owned by another person;

(B) that the land is free from all encumbrances, or as the case may be details of the encumbrances on such land including any rights, title, interest or name of any party in or over such land along with details;

(C) the time period within which he undertakes to complete the project or phase thereof, as the case may be;

(D) that seventy per cent. of the amounts realised for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose:

Provided that the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project.

Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project:

Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 9 chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.

Explanation — For the purpose of this clause, the term “schedule bank” means a bank included in the Second Schduled to the Reserve Bank of India Act, 1934;

(E) that he shall take all the pending approvals on time, from the competent authorities;

(F) that he has furnished such other documents as may be prescribed by the rules or regulations made under this Act; and (m) such other information and documents as may be prescribed.

3. The Authority shall operationalise a web based online system for submitting applications for registration of projects within a period of one year from the date of its establishment.

Source: News

Residential sales up 13%, launches rise 19% in January-March

Residential sales up 13%, launches rise 19% in January-March

Residential property market is witnessing green shoots with housing sales growing 13% for the fourth quarter of 2016-17. The surge in the volume was primarily driven by Mumbai, Pune and Bengaluru, which together accounted for 57% of total sales across top-9 cities during the quarter ended March.

Total residential sales increased to 51,700 units during the quarter from 43,500 units in the previous quarter.

Residential markets seem to have recovered from the demonetization lows with sales and launches showing healthy levels in Q4 FY’17. Large part of the recovery is driven by the affordable housing segment which has found favour after getting infrastructure status.

According to the report, real estate sector in India has witnessed a revival after demonetization, with sales increasing by 13% as compared to 22% fall in the previous quarter across top 9 cities of India. Mumbai contributed nearly 23% to the total sales during the quarter, followed by Pune at 18% and Bengaluru at 16%.

The report added that there has been an increase in the number of launches across these cities by 19%, the highest in the last eight quarters. Around 51,500 units were launched in the fourth quarter of 2016-17 compared to 43,250 units during the preceding quarter. As far as launches are concerned, Mumbai contributed a maximum share of 26% to total launches followed by Hyderabad at 14% and Gurgaon at 13%. The share of affordable housing launches rose 22% owing to the recent sops offered by the government and infrastructure status received by affordable housing.

We might witness realignment of supply and demand with the implementation of RERA. While we might see some turbulence over the next couple of quarters, the long term outlook remains positive.

Inventory overhang also eased during the quarter – from 46 months in the preceding quarter to 38 months in the fourth quarter. Mumbai, Bengaluru and Pune together accounted for over 55% of the unsold inventory. Noida has highest share of unsold inventory aged above 3 years; more than 65% of unsold inventory in Ahmedabad, Kolkata and Pune is in the affordable segment.

Prices remained range-bound in top 9 cities, across all the segments, with marginal annual appreciation in the range of 1% to 3%. Bengaluru, Hyderabad and Chennai witnessed a marginal appreciation in the range of 3 to 5% per annum.

So its good sign for the entire Real Estate Market and Siliguri could soon see a spurt in demand across all segments..

Carpet Area definition under RERA

Carpet Area definition under RERA

Literally, carpet area of your apartment is the space on which you may be able to lay a carpet. Simply put, this is the actual usable area in your housing unit.
Due to an ambiguity over the definition of carpet area, some developers had earlier been charging home buyers according to built-up area, super built-up area, etc. But the recently passed Real Estate (Regulation and Development) Bill, 2016, makes the definition clearer.
According to the legislation, “carpet area means the net usable floor area of an apartment, excluding the area covered by external walls, area under services shaft, exclusive balcony or veranda area and exclusive open terrace area”. However, carpet area includes the “area covered by the internal partition walls of the apartment”. The Bill further explains that the expression “exclusive balcony or veranda” means the area of the balcony or veranda which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the buyer. The same goes for the exclusive open terrace area.
Clause 4 (2.H) of the Bill emphasises that developers will now have to sell apartments on the basis of carpet area as defined in the Bill. A clearer definition is expected to bring more transparency in the sector.

Smart Agent Vs Foolish Agent

Smart Agent Vs Foolish Agent

 

Many people think the key to success is working harder and working more hours. But we don’t agree.

We agree with Abraham Lincoln when he said, “Give me six hours to chop down a tree and I will spend four sharpening the axe.” 

Marketing yourself (and your listings) is a never ending challenge. There’s a classic story of a lumberjack that illustrates the smart agent’s thinking. A young man approached the foreman of a logging crew and asked for a job. He asked the young man to cut the tree down. He did so and did it well. Impressed, the foreman said, “You can start Monday.” By the time Thursday afternoon arrived, the worker’s boss told him to pick up his check when he left for the day. The young man said, “I thought you paid on Friday.” “Normally we do,” said his boss. “But we’re letting you go today because you’ve fallen behind. Our charts show that you’ve dropped from first place on Monday to last place today.” The new worker was confused. He was the first one there and the last one to leave. He took the shortest amount of breaks. The foreman thought for a minute and then asked, “Have you been sharpening your axe?” The young man replied, “No sir, I’ve been working too hard to take time for that!” The moral of the story is simple.

Working harder can’t replace or overcome working smarter.

Our goal is to share the techniques and strategies we have worked to perfect with our team of Realtors. There’s so many different opportunities and niches that are overlooked frequently. I remember a foolish agent that was like the young lumberjack. This agent was convinced that working hard and long was the was the way to go. This agent worked 60-75 hours a week. Constantly prospecting and doing what he thought was working the right way.

This agent thought his commitment to good service and his visual efforts in marketing were enough to separate himself from his competition.

What he didn’t realize was that every agent says the same thing. He may have worked harder than other agents, but since every agent claims they do that, owners didn’t see a difference. The smart agent is relaxed and doesn’t work more than 40 to 50 hours a week. The difference between these two is obvious and noticeable even outside of work.

A smart agent has systems in place to bring him listings. Plus, he actually stands out.

So, that begs the question? What can you do to stand out. How can you prove yourself as an expert in your field and earn the automatic respect from customers and potential customers? You have to become an authority. Really stand out, with your knowledge and experience. There are ways to automatically position yourself as that. Think about when you give away a business card, or even if you mail out letters. Most mail is opened right over the trash can, there’s a high chance it’s going to be thrown away. People get business cards ALL THE TIME. They’re nice to give out, but it’s not like business cards really help you stand out that much. They’re something you have to have, but it won’t create a point of difference that’s going to really stick in someone’s mind, especially since they all say somewhat of the same thing. Take about 20 minutes and ask yourself these 2 things. What unique benefit can I bring to a client? Why do I deserve to be in this market? smart_agent_foolish_agent_2

Sell Yourself First!  LOVE the product or lose the sale.

If you are not excited about the product you have to sell, how could you possibly expect anyone else to be? In the case of Real Estate, the ‘product’ is YOU. Sure, there’s a lot more to it than you, but ultimately, every person wants you to answer the age old question: “What’s in it for me?” Trying to convince an owner you are the best agent to list their home is nearly impossible if you don’t believe it is true. Before trying to sell one single person, be sure you’ve sold yourself. You’re good enough, you’re smart enough, and people WILL like you when you bring a positive, confident attitude to everything you do. Have an answer to “What’s in it for me?” questions. It is not likely you will get that exact question, but it will be the reason behind many things an owner asks. Be prepared with a solid, real-life reason why they should list with you, versus another agent. This is not the place for meaningless, buzzword-filled proclamations. Bring something unique to the table. Something that sets you apart from other agents in your market. Of course, you must be able to prove your confidence through action. Be ready to DO what you said you would! Give an honest, straightforward answer, and you’ll win their trust. Back it up with actions, and you’ll win their business.

The smart agent determines needs first.  Then present a solution.

It is incredibly arrogant to walk in, solution in hand, without first taking time to learn the needs a person has. Not only are you coming across as pushy, you are setting yourself up for failure. If you walked into a store asking for a specific item, and got a pitch on how great the store is at meeting their customer’s needs, would that help? What value does a pitch have to a person in need? So determine needs up front, and then deliver a solution specific to the need. One-size-fits-all is great for hats and oversized t-shirts, not sales presentations. Now, just to be clear, you should not be “winging it” when you meet people. Proven scripts are just that, proven. Words, phrases, and key points that cause people to act or respond in a certain way. Smart agents know this, and constantly fine tune their presentations. However, a good presenter will not come across as a presenter, because he or she has allowed room to be flexible within the script. Get so comfortable with your presentation it doesn’t require a pitch. You should naturally be able to flow through it in your own words. Tailor your delivery and style such that they blend with your personality. Above all, be genuine in your approach. In this way, you can speak to needs, while staying on track and highlighting the benefits and value you bring as a solution to those needs.

You are the expert.  Act like one…

People turn to experts for help. Become the expert in what you do. Take time to do your homework. Know your market inside and out. Stay abreast of trends within the industry. Keep up with what is going on in your town. You can find an incredible amount of information with a little digging. Take staging for example. It takes a lot of work, can be a huge hassle, and frankly, most owners don’t want to deal with it. Many agents will tell owners they should stage the home, but few have specific numbers to back it up. They wind up arguing a bit on the merits of staging, and then giving up.

As an expert, you should lay out the facts, and help the owners make an educated decision.

One report on staging has these stats to share: Owners who turned to staging as a last resort spent almost 200 days waiting for their home to sell. Homes that were staged from day one? Averaged a sale in 42 days! A 72% faster sale. Not only do staged homes sell faster, the report definitively showed they sell for more money, too. The average staged home sold for 6% above the asking price. This is not an opinion or hearsay. These are facts that clearly support the value of staging. Don’t build a presentation that buries people under mountains of stats and data. But do use statistics to make a clear point. You will find you have a lot fewer arguments and fights with owners when you can take opinions and emotions out of the equation. Show stats, and let the numbers do the fighting for you instead.

SC: Protest within 12 years or lose property to squatter

A bench of Justices R K Agrawal and A M Sapre said if a person proved actual, peaceful and uninterrupted possession of a property owned by another for more than 12 years

If a person does not protest someone illegally occupying his property for 12 years, then the squatter would get ownership rights over that property , the Supreme Court has ruled.

A bench of Justices R K Agrawal and A M Sapre said if a person proved actual, peaceful and uninterrupted possession of a property owned by another for more than 12 years, “a case of adverse possession can be held to be made out which, in turn, results in depriving the true owner of his ownership rights in the property and vests ownership rights of the property in the person who claims it“.

However, the bench put in a caveat by ruling that such a person (squatter) must necessarily first admit ownership of the true owner over the property and make the true owner a party to the suit before a court for claiming ownership over the property through adverse possession.

This ruling came in a case where a Muslim man had claimed ownership over a property through adverse possession in Jalgaon of Maharashtra. He had attempted to advance the plea of adverse possession to claim ownership rights over the property , which was inherited by a Muslim woman after the death of her father.

Setting aside a Bombay high court order in favour of the man, the SC bench said, “When both courts below held and, in our view rightly , that the defendant has failed to prove the plea of adverse possession, then such concurrent finding of fact was unim peachable and binding on the HC. The HC erred fundamentally in observing that it was not necessary for the defendant to first admit the ownership of the plaintiff before raising such a plea.“

The man’s next plea was that he was the adopted son of the deceased original owner and hence was the rightful owner of the property. “The plea taken by the defendant about adoption for proving his ownership over the land as an heir of the original owner was rightly held against him. He has failed to prove that he was the adopted son. It is a settled principle of Mohammadan law that it does not recognise adoption,“ said Justice Sapre, who wrote the judgment for the bench.

The court gave ownership rights to the woman who had inherited the land from her father.

Ministry of Housing notifies remaining sections of RERA- GFS Realtors

Ministry of Housing notifies remaining sections of RERA

Ahead of the implementation date of May 1 for Real Estate (Regulation and Development) Act, 2016 (RERA), the government has notified remaining sections of the Act through a gazette.

The sections notified by the Ministry of Housing and Urban Poverty Alleviation include key measures such as registration of realty project and real estate agents, functions and duties of project promoter including compensation, insurance and title of the project, rights and duties of allottees.

The notified measures also include punishment for non-registration of projects and recovery of interest or penalty or compensation and enforcement of order, etc.

The notified section of 79-80 that deals with jurisdiction of the act has also been notified. “No court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under this Act,” said the notified section 80.

It’s a positive step and shows the government’s commitment to protect the home-buyers’ interest. We now hope that all the state government will fulfill their part of their obligation as mandated by the Act and immediately notify rules and appoint authorities as this notification ends any speculation about extension of implementation deadline of May 1.

It is hoped that the central government will now focus on dilution of RERA rules by state governments in favour of developers and take steps to get those rules revoked and fresh rules in line with central rules are notified.

The Real Estate (Regulation and Development) Bill was passed on March 10, 2016 after a long wait of 8 years. The Bill was introduced in Rajya Sabha by the UPA government on August 14, 2013 and was referred to the Rajya Sabha select committee on May 6, 2015.

The Real Estate (Regulation & Development) Act, 2016 (RERA) was notified on May 1, 2016. All the states are required to notify realty rules and establish the realty regulatory authorities and the appellate tribunals maximum by April 30 as the Act would commence its full operation from May 1.

GST to boost warehousing, logistics !!

GST to boost warehousing, logistics !!

The roll-out of the goods and services tax and real estate investment trusts is expected to fuel the growth of warehousing stock across the country in the next few years.

The warehousing, manufacturing and logistics industries will benefit the most from the implementation of GST in India and the new tax regime will also usher in an era of upgradation in the warehousing infrastructure.

Accordingly, the total stock of Grade-A and Grade-B warehouses in the country grew about 16% in 2016 over the previous year to 111.9 million sq ft. Of this, the Grade-A stock was 32.9 million sq ft while the remaining 79 million sq ft was Grade-B. This year, JLL India expects the Grade-A and Grade-B stock to grow 18% to 132.5 million sq ft.

GST will ensure that India for the first time will be exposed to consolidated large space central warehousing parks instead of the current scattered poor quality standalone spaces.

Siliguri will also develop into a major Logistic Hub in the days to come !!

Home prices across India on the rise: RBI

Home prices across India on the rise: RBI

Real estate prices continued to grow steadily according to the latest installment of Reserve Bank of India’s House Price Index (HPI).

While the overall index sequentially rose 2.2% at the end of December 2016, almost seven of the ten cities tracked by RBI saw increase in price last year.

The House Price Index, that measures price levels across the nation, rose to 240.2 in December, from 234.9 in the September quarter.The annual growth in all-India HPI increased by 60 basis points to 8.3% however it remained lower than 9.7% annual growth recorded a year ago.

RBI’s index also noted a wide divergence in city-wise housing price movements. Annual growth in the price index ranged from an increase of 19.3% in Lucknow to a price correction of 5.4% in Jaipur during the period under review.

“All the metro cities witnessed housing price-rise on Y-o-Y basis, though Chennai witnessed some moderation during the latest two quarters,” the RBI said.

“The city-wise HPIs also witnessed large variance in sequential terms Kanpur recorded highest rise at 12.1% whereas Kochi witnessed significant contraction at (-) 4.7%.

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