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Trend Mill
Finally, a flat for Mr Sandhu
Ground Realty
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Trend Mill
With property in both states not as expensive as Punjab, purchasing property in the hills is the new big thing. Investors are buying land at cheaper prices to build lodges and cottages, create an additional source of income and, of course, own a holiday home. With the Himachal Pradesh Apartment and Property Regulation Act of 2005 allowing non-Himachalis to buy land or apartments from licensed builders measuring not more than 500 square yards, many roads to investment seem to turn towards the state. “We always wanted to buy land in Himachal. I recently struck a deal for a 500-square yard plot between Kufri and Chail. It is an ideal place for constructing a cottage. A square yard costs Rs 4,500 and I am told that in tourist season, a cottage fetches anything between Rs 3,000 to 5,000. It is not a bad investment,” says Ludhiana resident Harmohan Singh. “Ten plots of the same size are still available in this area and many of my friends are also planning to buy property there.” He had approached a property dealer in Himachal, who helped him strike the deal. “I paid 25 per cent amount as advance. The rest is to be paid after the deal,” he says. And with normalcy returning to Jammu and Kashmir, can investors be far behind? Though rules do not allow outsiders to purchase and own land in the state, investors have discovered ways and means to circumvent regulations, purchase land and build on it to attract tourists. Punjabis are heading towards Jammu and its surrounding areas to buy property to exploit the tourist potential. A recent Jammu Development Authority scheme near Kud in Jammu had many people interested. “Though it was impossible for Punjabis to buy land in J&K due to the state subject law, people have found ways. They contact a property dealer, who buys the property in his name and passes it to Punjabis either on a power of attorney or a lease. This method is being accepted,” says real estate consultant Parminder Singh. And how safe is this method. “Well, it’s a gamble buyers are willing to take. Renting out property at a tourist spot would pay back the amount within a year or two. Even if the executioner of power of attorney went back on his word two-three years later, the investor would have already recovered his money by then,” he adds. Several real estate agents in Punjab said their counterparts from Himachal and J&K had approached them to strike deals. “Nobody is buying or selling in Punjab due to the slowdown. But at several out-of-the-way places in both states, a square yard is available for not more than Rs 5,000. This is exactly what tourists want – a place to stay far from the madding crowds. It’s perfect for buyers and sellers,” says a dealer seeking anonymity. “After building the lodge, you hire a manager to look after operations and voila! It is a good holiday home for the buyer, too.” Kufri-based real estate agent R.K. Khanna says people are not aware of the change in regulations. “We are selling plots under 500 square yards and not flouting any rules. The public is not aware of the latest amendment or they would be flocking to the hills,” he says. Himachal has threw open the doors to outsiders by amending the Tenancy and Land Reforms Act, 1972. Earlier, only state domiciles could purchase property in the state. The Himachal Pradesh Apartment and Property Regulation Act 2005 permits non-Himachalis to buy land plots or apartments from licensed builders, without government approval. Non-Himachalis are free to construct houses on 500 square yard plots without any hindrance, but to buy and build on a bigger than the above, applicants must cite compelling reasons to settle down in the state at the time of seeking permission.
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Finally, a flat for Mr Sandhu
Famous for its peg, pagdi and paranda, Patiala is a blend of various shades and lifestyles. Home to aristocracy for as far as one can remember, the city is now ready to welcome apartment culture.
Residential development in
Patiala, which till few years back was restricted to independent houses, is finally witnessing coming up of apartments, with private builders and government agencies actively engaged in construction of
multi-storey flats. Though unlike Ludhiana and Amritsar, where people are jostling to book flats in housing schemes, craze for flats among Patiala residents is yet to pick up but property consultants and developers feel that city is likely to witness apartment boom in near future. Constructed by some private builders and Patiala Improvement Trust, presently, flats are available in only some areas of the city. “We had constructed 74
multi-storey flats in SST Nagar and the occupancy is 100 per cent,” says Patiala Improvement Trust chairman Indermohan Singh
Bajaj. He further informed that the Trust was now ready with another scheme, wherein 75 three room flats would be constructed for LIG and MIG categories at one of the Trust sites opposite Khalsa College on Badungar Road. Besides, the Trust is also contemplating construction of 60 flats under another developmental scheme. Expressing his views on less demand of flats in
Patiala, Bajaj said that Patiala was neither densely populated like Ludhiana nor were land prices as high. “That’s why people prefer independent houses. But now the trend is changing and there has been an encouraging response to proposed apartment schemes,” he says. Apart from the Improvement Trust, private developers, too, have started projects in
Patiala. Ambey Apartments, promoted by Ambey Developers Private Limited, is coming up with 154 three bedroom,
multi-storey flats near Sai Market. Of the 154 flats, construction of 100 is complete. “Flats work out cheaper than independent houses and offer many facilities like proper parking, fire fighting arrangements and security. People feels safe, secure and comfortable,” says
S.P. Goyal, director, Ambey Developers, while adding that it may take some time for flat culture to flourish in
Patiala. Meanwhile, it is also learnt that some private builders are contemplating construction of luxury flats in
Patiala.
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Ground Realty
Four things every house owner dreads are termites, cracks, leakages and dampness. Any of these occurrences is enough to send the home owner deep into the throes of misery. Though there are several remedies available to set the house in order, wary eyes are on the constant lookout for reappearance of any signs of distress. As they say, prevention is better than cure — the best remedy is to take extra care at the time of construction.
A systematic approach towards handling these problems can well lead to their elimination. Let us consider waterproofing of a house first. To get rid of dampness and leakages, following six fronts need to be handled: Basement construction, damp-proof course, water supply piping, sanitary and rainwater piping, sunken floors and leak-proof roofing . We have already covered the first four. Let’s discuss the last two.
Sunken floors
IN most houses and buildings, there are sunken floors in bathrooms to accommodate Indian type water-closets and floor traps. Floor traps don’t demand much depth but the gradient given to pipes necessitates their fixing at a lower level. Sunken floors are often a cause of leakage and dampness in houses if proper water-proofing treatment is not done. Here are some guides for waterproofing: Fill the cracks: First clean the surface of the sunken floor of all mortar deposits that might have fallen during plastering . Now, check the floor surface for cracks. If any, these need to be treated. Cut the cracks into small ‘V’s and fill them with a polymer compound. Use a compound like ‘crack fill’. These are available at shops selling waterproofing material or paint. Applying waterproofing: Mix 1 part of acrylic emulsion (liquid) with 2 parts of polymer modified cement (powder) by weight to form a cream-like paste. Apply 2 coats of it with a brush on the slab surface. It can be applied even on wet slab. Apply on walls as well up to a height of 6 inch above the bathroom floor level. On drying, it will form a flexible waterproofing film. One litre of this paste covers 7 to 8 sqft area in one coat. Pidifin 2K, Fosroc Hydroproof and Roff Hyguard ex are good products to use here. Membrane alternative: An alternative to the above waterproofing application is readymade membrane. There are synthetic versions available. These need to be notched into walls. Lay the membrane as prescribed by the supplier. Cement plaster: After waterproofing application or fixing of membrane, apply a 0.5-inch thick 1:3 cement sand plaster layer over the surface or the membrane and on walls up to the height of water proofing application. Allow to dry and cure well for at least seven days. Bitumen application: When the cured plaster surface is fully dry, apply two coats of bitumen over it. Use 85/25 grade bitumen for it. Apply 150 grams bitumen per sqft in each coat. After application of bitumen, immediately lay a PVC sheet over the bitumen so that the sheet sticks to it. See that all areas get covered well. Clinker filling: Next, fill the sunken area with clinker or foam concrete fill till you get the bottom screed level. Clinker and foam concrete are lightweight and don’t burden the slab. The base is ready. Next, lay the floor like any other.
Leak-proof roofing
Leakage from the roof slab has a negative effect on the health of inhabitants. It gives rise to a sinking sort of feeling besides damaging the house and making it weak. Thus full precautions must be taken during the laying of roof slab against dampness and leakage. Mostly RCC roof slab is used in the houses. Treatment it as under: Provide bearing plaster: Always provide bearing plaster on top of brick walls before laying of RCC slab and giving bearing to it on the walls. This plaster can be ½ inch thick. Use 1: 4 cement sand mortar for it. Cure this bearing plaster well and allow it to dry. Now, apply two bitumen coats on it by using about 200 gm of it per running foot of 9 inch wall. Now rest the slab on it. This bearing plaster will allow the free movement of slab during summers and winters. It will be still better if you can place a 24 guage GI sheet on the bearing plaster before laying slab on it. Provide expansion joint: Leave a gap of say 10 mm between the edge of slab and the end course of bricks while resting slab over the wall. This gap will take care of expansion in summer. It will allow the slab to expand and no cracks shall appear at the wall-slab junction. Fill this gap with sand or a compressible material so that nothing undesirable gets filled in it. Don’t use thermocole, shaltex board is a good choice. Provide proper slope: Always provide proper slope to the roof towards rainwater pipes. Keep this slope as 1 in 50. If there are a number of rainwater pipes, divide the roof into pockets and slope each pocket towards nearest pipe. Keep pipes covered with iron gratings so that no debris or stone pieces fall and block them. If you are able to keep the rain water pipes choke-free and allow no rainwater to stand over the roof by providing proper slope to it, you have almost clinched the issue. Some slope can be provided in the concrete slab’s top surface and balance can be made with mud plaster and clay layer. Provide concrete gola along junctions: All along the junction of brick walls and slab, provide a concrete gola of 3 inch radius. This should be done before plastering the inner face so that there is no vertical joint between the plaster and the gola to allow water to travel. Roof slab coating: In general, roof slab is well cured after its laying, allowed to dry and then covered with two coats of 85/25 grade bitumen laid hot at a consumption of 150 gram per sq. foot per coat and then sanded. This technique has a number of flaws. Slabs are not allowed to fully dry before applying bitumen. Even if that is ensured, bitumen used is not of good grade and density is not maintained. Generally, bitumen is bought from road makers. It is mostly of 80/100 grade and not good for slab. Its application doesn’t bring desirable results. Applying waterproofing compound: Clean the slab surface well of all debrisand dust. Now, prefer to apply waterproofing compound on the top of slab. Don’t use non-flexible compounds. Use breathable, flexible, cement-based compounds like Pidifin 2K. These are two part cementitious acrylic compounds that when applied in 2 coats, should give 1 mm thickness. Lay the topping: Now, lay topping material layers. Avoid brickbats; these unnecessarily increase weight on slab. Provide mud plaster over the slab followed by a 3 inch layer of earth — these are good insulators. Give required slope. Over these 2 layers, chosen tiles are laid and grouted. Roof tiling: People prefer kota stone or choose marble, brick tiles or ceramic porcelain tiles. Brick tiles don’t look that good but are cheap and best if well grouted and finished with flush pointing. Otherwise, ceramic tiles of tough type and Group V laid and grouted well are a good option. Avoid kota or marble as these are porous and trap water. Follow these steps and enjoy happy dry days! This column appears fortnightly. The writer is deputy chief engineer, civil,
PSEB.
Pre-monsoon check
Before the onset of monsoon, get the roof cleaned of all debris and tree leaves. Check for visible cracks and get them repaired with water proofing material or cement grout. This is vital. In addition to draining off rain water, you are not to allow its entry below the topping. This water gets entrapped in between the slab and the roofing material and later surfaces on the underside of the ceiling. Check all rain water pipes. All should be free of debris.
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Section 54F covers CGT exemption, investments
A. Exemption from the taxability of capital gains on the sale of plot and its consequent investments in the purchase of a residential flat will have to be claimed under section 54F of the Act. The major differences between section 54 and section 54F of the Act are as under:
n Section 54 of the Act applies where a residential house is transferred and the long-term capital gain arising on such transfer is utilised for purchase or construction of a residential house. The purchase of the house has to be within a period of one year before, or two years after the date on which transfer of the residential house took place. However, in case of construction of a house the time period of three years has been provided in the section. The entire amount of capital gain would not be taxable if the investment in the purchase or construction of the new house is equal or less than the amount of capital gain. The section also provides for a proportionate exemption in case the capital gain is higher than the cost of the new residential house. n Section 54F is applicable where the capital gain arises from a long term capital asset other than the residential house and the net consideration on the transfer of a capital asset other than a residential house, is utilised in the purchase or construction of a residential house. In such a case the capital gain so arising is not chargeable to tax. The specified period in both sections remains same. Net consideration means the full value of consideration received or accruing as a result of the transfer on the long term capital asset less any expenditure incurred wholly and exclusively in connection with such transfer. The proportionate exemption is also allowed in case full net consideration is not invested. n
Exemption under section 54F of the Act is allowable only if the assessee does not own more than one residential house, other than the newly acquired residential house, on the date of the transfer of the long-term capital asset.
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Income from trees you didn’t grow is tax-free
Q. I sold some agricultural land situated within municipality limits. There were certain trees growing on it, which I also sold in the relevant year. These trees had grown naturally and were not planted.
The capital gain arising on sale of agricultural land is taxable as the same is within municipal limits. However, I would like to know whether the sale of trees and wood could be counted towards agricultural income?
— Birender Kumar A. Income from sale of trees that have not been planted by anyone is not agricultural income. For the purposes of agricultural income, some basic operation such as tilling the land, sowing seeds, planting and similar operations must be carried out by a human agency. The income derived from agricultural land after carrying out such operations is treated as income from agriculture. Your attention is invited to a decision of the Privy Council as reported in 16 ITR 330 wherein it has been held that the income of the nature referred to in the query would not be treated as an agricultural income.
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Buy house together, repay loan separately
A. The answers to your queries are as under:
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Expenditure incurred on the stamp duty and registration charges forms part of the cost of the house. n
Section 80C of the Income-tax Act 1961 (the Act) provides for the deduction of amount paid or deposited towards repayment of any loan borrowed from the bank/financial institutions/public company/co-operative society engaged in the business of providing finance for the construction of houses. The maximum limit of such deduction is Rs. 1 lakh including all other payments/ deposits specified in the aforesaid section. n
Stamp duty and registration fee and other expenses incurred for the purposes of transfer of the house property are also covered for the purposes of aforesaid deduction. n
Both you and your wife can claim the deduction in case the house is owned jointly and the amount is borrowed by both of you, and the repayments towards the loan so obtained are also made separately by both of you. I may add that it will be better to get the EMIs fixed separately for both of you so as to avoid any problem in this regard.
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Deduction Interest on application money doesn’t count
Q. I am a government employee and had applied for a 200 square yard plot advertised by the urban authority. The application money — Rs 49,000 — was financed through a bank at 10 per cent a year. I have not been allotted any plot in the draw held by the authority. Hence, I have incurred a loss of Rs 4,900. Can this amount be shown in my return as a loan against income from house property and adjusted against any other income? Is there any other alternative?
— S.K. Arya
A. The payment of interest on amount borrowed for the acquisition of the plot is not allowable as deduction under the provisions of the Act. However, in case the plot had been allotted to you, the interest amount would have been added to the cost of the plot. In the given case as the plot has not been allotted to you, the amount of interest Rs 4,900, which has been paid for the temporary finance arranged for deposit with the urban authority for allotment of the plot would be a loss which will have to be borne by you.
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Consider pre-payment sum and compare interest rates
Q. In March 2009, I took a loan of 20 lakh from LIC Housing Finance Company on floating rate of interest. Since then, LICHFC is coming with news of reducing interest rates. On enquiry, they say it is for new customers and for short duration only. They also advertised another scheme wherein interest rate was fixed at about 8.9 per cent for three years. I asked the possibility of shifting to this scheme. I was told to be ready with extra 2 per cent due to pre-payment. Kindly advise what should I do. Should I send an application in writing or follow any other course of action?
— R.K. Gupta
A. The present rate of interest on the loan of Rs 20 lakh from LIC Housing Finance Company has not been indicated in the query. You should compare the said rate of interest after taking into account the pre-payment amount and compare the same with the new scheme of interest rate, which has been fixed at about 8.9 per cent. This will enable you to decide the course of action to be taken for the change to a new scheme from the existing scheme.
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First complete mutation formalities
Q. I had purchased a flat build by private builders from the bank in an open auction. The bank has given me only sale letter along with original registry duly discharged in my favour. Please clarify the following:
n
How can I get the flat registered in my name? Khasra nos. are mentioned in the registry and the sub-registrar office is asking for a copy of ‘intikal’ (fard) which is not in the case of a flat, according to the area patwari. n
If I get the flat registered in my name, how can I sell it? Kindly guide me in details so as to convince the registrar.
— Ashok Kumar A. In case of a flat, there could not have been any entry in the records of patwari. The particulars of the land on which flats are constructed would have been so entered. A copy of such a ‘fard’ should be available with the builder. The Builder would have obtained an approval for construction of flats on such a land from the municipal authorities. However, in case of a flat, the mutation in municipal records should have been effected by the bank on the basis of the documents in possession of the bank and thereafter in your name when the bank sold the same to you. I would, therefore, suggest that you should get the formalities as to the mutation effected and thereafter the registrar should have no objection in registering the sale deed in respect of the flat that you intend to sell.
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Famous for its peg, pagdi and paranda, Patiala is a blend of various shades and lifestyles. Home to aristocracy for as far as one can remember, the city is now ready to welcome apartment culture.
Residential development in Patiala, which till few years back was restricted to independent houses, is finally witnessing coming up of apartments, with private builders and government agencies actively engaged in construction of
multi-storey flats.
Home owners’ nightmare
The meltdown, skyrocketing realty prices in Punjab, and the dream to have a picture postcard home in the hills… Investors have now identified a new destination – the serene and idyllic hills of Himachal Pradesh and Jammu and Kashmir.
Q. I own a plot of land that I intend to sell and then buy a residential flat in a society from the sum. Will the capital gain earned on the sale of plot be exempt under section 54 or section 54F of the Act? Would you please highlight the major difference between the two sections?
— R.K. Anand
Q. My wife and I are planning to take a home loan jointly to purchase a flat. Kindly advise me if the stamp duty and registration charges are included in the cost of the house. Is income tax benefit on stamp duty includible in loan repayment for which a deduction is allowable? What is the best way to give EMIs to bank to get income tax benefit for both of us? We are salaried employees.
— Deepinder Singh