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Retire to luxury
Positive index
TAX TIPS
GROUND REALTY
REALTY BYTES
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Retire to luxury
There is more to the quest for a home than mere economics and monetary considerations. ‘Home is where the heart is;’ and as one advances in years, the full import of this oft-repeated sentence assumes a different connotation. Home becomes more than a house; it is your own space where you can assert your will and enjoy freedom after a lifetime of struggle and hard work. So, for the silvers, the quest for a home also involves the quest for an ambience laced with quietude and tranquillity, where, in the words of Anne Reeve Aldrich, one could have “a short respite from cares and sorrow, a brief time of flowers, and music, and love, and laughter, and ecstatic tears”. When silver shines through one’s crowning glory, that is the beginning of the golden age, and more and more people are looking for a serene and calm life far from the humdrum of city life post retirement. The older adults nowadays are more equipped financially, physically and emotionally to choose a fulfilling, independent and active lifestyle, and retirement is no longer seen as the onset of old age where one settles comfortably in a rocking chair. Instead, it is the beginning of an ‘active’new lifestyle where one can utilise one’s abilities to serve society, and feel gainfully employed once again.
The concept of retirement homes or senior citizen settlements is fast gaining popularity in India now. The concept, though quite popular in the West, lacked sizeable following in our country, basically because of our cultural beliefs. But now as nuclear families have become a norm and children as well as parents desire an independent lifestyle, the trend is fast catching up, if one goes by the number of retirement homes and resorts that have come up in the recent past, especially in areas near metros.
Gaining ground
Quick to cash in on the idea, a number of builders have come up with projects of retirement homes and resorts. Vineet Singh, Business Head, 99 Acres.com: “Retirement homes as a concept is gaining traction in India albeit a little slowly. The slow growth will persist as Indian elderly people prefer to stay with their children rather that stay alone. Slowly the trend of senior people living in ‘customised’ old age colonies etc is also growing. In the NCR we have seen a good response to Ashiana Group’s Bhiwadi and Ghaziabad projects. There are other similar projects across the country. In this category as well you see products catering to the many asset classes of real estate. These homes provide an infrastructure which caters to all needs of the elderly.” Builders like the Ashiana Group of Builders, Brigade, Paranjape Schemes (Athashri and Golden Nest Senior Commune), and Clasic (Kudumbam and Melur Meadows) have projects running in major metros like Delhi, Jaipur, Pune, Bangalore and Chennai. Even LIC Housing Finance Limited has LIC Care Homes in Bangalore. The pilot project with 98 units was handed over to buyers in October 2006. “After our successful Utsav brand retirement resorts projects in Bhiwadi (60 km from Delhi) — spread over 15.5 acres with 640 sold out units, and in Jaipur — spread over 7.5 acres comprising 310 apartments — we have launched the Lavasa project with an investment of Rs 140 crore,” Vishal Gupta, Joint Managing Director, Ashiana Housing Ltd. told The Tribune.
Facilities
Retirement homes provide a number of facilities that can make living for the elderly far more secure and comfortable. Advanced medical facilities in and around the area, high-tech security systems, recreational choices, especially designed keeping this clientele in mind, and other superior facilities are a part of these communities. According to Gupta, “Utsav Retirement resorts are planned, constructed and maintained as quality living places for the silvers catering to their aging needs. The resorts are planned keeping in mind the requirements of the seniors. The resorts cater to various needs of the residents like wheelchairs friendly campus environment, security, social, medical, spiritual and recreation facilities, besides having club, swimming pool, badminton court, and gymnasium. An activity centre, lush green lawns in houses , a restaurant, convenience store, library, TV hall, Internet café, auditorium, card room, hobby rooms and table tennis room are other attractions. The resorts also host weekly fortnightly activities including movie shows, satsang, theatre, tambola etc. Ashiana Utsav near Gurgaon has a golf course for seniors. Clasic Kudumbum in Chennai has an ayurvedic centre, Athashri in Pune has a special pool for hydrotherapy, and Vrundavan Resorts in Coimbatore has rooms to accommodate a caregiver and staff to provide secretarial, legal and financial assistance. The interiors of the units are also specially designed to cater to the needs of the senior citizens. Emergency switches at different places, big sized switches in red colour, inbuilt night lamp, smooth corners, matt finish and anti skid tiles within the units help the elderly to be independent without any concern. The bathrooms come fitted with gab rails and arthritis-friendly handles.
Cost of comfort
However, moving into a retirement community doesn’t come cheap, although there is a wide range to accommodate different budgets. Apart from the cost of a unit, the residents have to pay for the facilities being offered. The residents’ association manages monthly maintenance for facilities like clubhouse, gardens, and street lighting, and in some of the places the cost works out to Rs 1,500 per family per month. According to Gupta, one can get property in Utsav Jaipur at Rs 1420-per sq feet and in Bhiwadi at the rate of Rs 1720 per sq feet, respectively
Ownership
You can either buy a house outright or pay a deposit and a rent for the rest of your life. The deposit will revert to your children as part of your estate. But if you choose to buy a house, then it cannot revert to your children, as most of these colonies have an age bar — most don’t accept people less than 55 years of age. Nor is anyone allowed to buy a house as an investment. Builders, such as Paranjpe, offer a buyback scheme for these homes after the demise of the resident
couple. This is part of the original sale agreement with a built-in price escalation.
Bright future
Studies have revealed that locations such as Chandigarh, Dehradun, Mysore and Goa are emerging as attractive destinations for senior citizens. At the industry level, too, there is a lot of excitement about the concept. Says Sartaj Sandhu, a Mohali-based real estate consultant and investor, “Retirement home segment is a good value creation opportunity with a lot of scope in the near future. Security, companionship and comfort are the major concerns of seniors, and all these can be effectively addressed in such projects. As the income levels of the upper middle class grow, there will be several takers for this concept, though it will remain a niche segment”. “It’s a good option for those with purchasing power and for those whose children live abroad or have transferable jobs,” he adds. According to him, the area around the Tricity holds good potential for the development of retirement residential projects as well as resorts due to the excellent infrastructure and availability of world-class healthcare facilities here. No wonder then that the region is on the radar of major builders also for these projects . As Gupta says, “Ashiana’s target is to bring Utsav Retirement resorts to at least 10 locations by 2013 from three at present. Ashiana housing will develop these retirement resorts on joint development models so if any opportunity comes our way in the cities like Chandigarh, Panchkula, Mohali, Dehradun, Haridwar, Amritsar etc we would be happy to start projects in collaboration with the local land owner”. Developers are also looking at a big NRI retirement market and building homes for the high-income couples working abroad who will retire in the next the three to five years. There is no denying the demand but the government is yet to work out a plan to deal with the country’s aging citizens, though the private sector has recognised the growing demand for retirement homes.
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Positive index
A major concern for RBI flows from the unusual rise in asset prices over the past six months or so, fuelled largely by excess liquidity in the system. Most central bankers in the world kept easy liquidity conditions during 2009 to fuel a faster recovery. However, the easy liquidity ended up escalating the existing asset prices, without creating any new productive assets. In India, too, the growth of private investment was hardly visible in 2009, which was clearly reflected in bank credit growth at single-digits. Consequently, a lot of liquidity in the domestic system, later compounded by a recovery in the foreign capital inflows, may have created new asset bubbles.
RBI has studied the real estate prices in several cities recently and found evidence of potential real estate bubbles. The recent auction of a 19th floor duplex flat in Worli for Rs 37 crore was described as madness by the head of a global property consultancy. An RBI internal study shows the makings of a bubble in other cities like Hyderabad, Bangalore, etc. The real estate prices in state capitals like Jaipur, Lucknow, etc, too, have not come down in the past year, following the global crises. In retrospect, it might have been a big mistake on the part of banks to have bailed out the big real estate players after the 2008-end market crash. The banks, by giving real estate companies financial succour, ensured that the price of real estate did not normalise enough downward. Needless to say, this decision was largely influenced by the ‘politician-real estate baron’ nexus. Now it is coming back to haunt all of us. The one big consensus shift after the global financial crises was that monetary policy must sharply address asset prices, such as that of real estate. So this time around, real estate is very much on RBI’s agenda.
The power of two
The RBI may soon come out with two real estate indices — one reflecting movement in residential property prices and another for commercial property rates. An RBI report on asset price monitoring system has recommended that the indices should be revised every quarter. If RBI accepts the suggestions, the indices could be handy for financial markets as well as the central bank that decides the monetary policy. Several countries like the US, Canada, France and Hong Kong rely on their respective property index to gauge the asset price movement in the country. Currently lack of transparency in the residential property market transaction, absence of a single centralised regulator in a vast country like India and limited availability of price information pose important challenges for keeping track of real estate price dynamics and their relationship with financial stability and monetary policy. The report has recommended that the RBI should compile real estate price index on quarterly intervals and to begin with data should be collected for Delhi and Mumbai. Subsequently, RBI could add 11 other cities — Chennai, Bangalore, Hyderabad, Kolkata, Pune, Jaipur, Chandigarh, Ahmedabad, Lucknow, Bhopal and Bhubaneswar A real estate price index would be a primary index that institutional investors may rely on to sense the performance of the real estate sector. It would capture the performance of the realty sector as compared with other asset classes like stocks and bonds and also provide a better understanding of the risk and return for
commercial real estate. The index may be used as a basis for developing diversification strategies such as the percentage allocation to real estate to minimise risk for a target portfolio return. It would also be the first available index to measure the performance of income coming from this sector. The group has recommended that RBI should take inputs from banks and select home finance companies on sale and resale prices. This is because builders may not share property price information due to intense competition in the sector.
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TAX TIPS S.C. Vasudeva Q. We entered, through property dealer, into an agreement with our relatives who are residing in the UK during February 2007 regarding the purchase of a plot where we had been living since 1990. The agreement was valid for six months. My relatives came to India giving us very short time. I got signature, finger impression photographs of sellers, purchasers and witnesses but due to heavy rush of pending registry with Sub Registrar we could not get our registry attested. I was told by my relatives that they were to catch flight to UK from Amritsar the very next day. After discussion, they agreed to come to sub registration but they never turned up and “fled” to UK. I requested them many times on phone to clear the deed but they kept on dilly-dallying. Now, recently one of them came to India but never informed me about the visit. I contacted them again and felt that there was something amiss. They have received the amount for the deal. Please advise me on the following points: n
Can registry stamp paper be used as a documentary proof for filing a civil suit? n
What is the right and amicable procedure in such cases? n
Can they cheat us due to their NRI status? — Manhohar Singh A.
Your queries are replied hereunder: n
The stamp papers purchased on August 17, 2007, can be used by you for the purpose of executing the sale deed. The Supreme Court has held that there is no time limit for the usage of the stamp papers. n
It would be advisable to settle the matter amicably rather than filing a civil suit which will take substantial time. The right procedure would be to approach someone who is known to both the parties for rapprochement. n
Cheating is a criminal offence under the Indian Penal Code and therefore even if a person is a non-resident Indian, he cannot get away with this offence. n
Whether the stamp papers can be used as an evidence for civil suit will have to be checked up with a civil lawyer.
Rental income
Q. Please refer to my e-mail (dated March 6, 2010) in which I could not clarify my question properly, now I am sending my question by correcting the same. I and my wife have purchased a plot in the name of my wife, in which I have contributed one third of the cost of plot and the balance has been contributed by my wife from her own source of income. We, later, constructed a building on the said plot by contributing in the same way — one third of the construction cost has been borne by me and the rest by my wife from her own source of income. Now we want to rent out this property. Please let me know who will be liable to pay the income tax on the rental income. If we will be liable to pay the income tax to the extent of funds we have contributed on such rental income, on the said property. — Ram Kumar Garg A.
Your queries are replied hereunder: n
The income tax on the rental of the house property would be chargeable proportionately i.e. in the same ratio in which both of you own the house property. n
The funds utilised for the construction of the house are not chargeable to income-tax. However, you should be able to prove the source of such funds to the satisfaction of the tax authorities. Further, you should also be able to prove the cost of construction of the property taking into account the construction rates presently applicable to the nature of construction.
Ways to save tax
Q. In your column published on March 20, 2010 in the query raised by S. Kumar: “Son wants to buy built-up house for Rs 50 lakh”. a) Son got Rs 10 lakh to invest. b) S. Kumar to sell own house for Rs 40 lakh. c) If S. Kumar can give money to builder or through son’s account. d) Can S. Kumar get tax relief of long-term capital gain etc. Your advice: House to be purchased in Son’s name, so no relief to S. Kumar b) Gift Rs 40 lakh to son. c) LTCG to be paid by Kumar @ 20% + cess @ 3%, if held for more than three years. My view (Advise if I am correct?) a) Kumar to first gift the house of Rs 40 Lakh — no tax as gift is free. b) Son to sell the house for Rs 40 lakh when LTCG is attracted. c) To save the tax, he is to buy a new house for Rs 50 lakh and thus the LTCG is not taxed as it has been invested to purchase new house. Thus there is no tax involved. — Nripander Parkash Khanna A. Your suggestion with regard to the gift of the house to the son is correct so as to save the capital gains tax, but you have not taken into consideration the stamp duty and registration charges payable on the market value of the gifted property. The amount of tax payable on capital gain by Kumar can also be saved by investing the capital gain in the construction or purchase of a residential house by borrowing Rs 10 lakh/ or receiving a gift from his son and thereafter making a Will in the name of his son who would be entitled to the house in the event of the death of Kumar. This would obviate the necessity of payment of any capital gains tax as well as the stamp duty. I do hope you would agree with me that this would not lead to the payment of any tax or stamp duty.
The right loan equation
Q. I have got the loan of Rs 36,80,000 sanctioned from LICHFL to buy a plot from a private builder. The total cost of the plot is Rs 53,70,000. I have already paid Rs 20,63,100 and got the plot allotted on my name. The balance will be demanded in installments as per the development of the site. I expect the plot to be handed over to me by December 2010. My queries are as under: n
If yes, then will the whole amount, including loan taken for plot, will get converted to housing loan. If not, then what is the way out to get income tax rebate. n
Logically the whole amount should be considered as housing loan since it is as good as I have bought an independent house. — Jasbir Singh A.
Your queries are replied hereunder: n
You would be entitled to claim the deduction for the interest paid on loan borrowed for the construction of the house. The deduction for the interest paid during the construction period shall be allowable in five equal installments against the income from house property beginning from the year in which the construction is completed. n
You would not, however, be entitled to claim deduction in respect of the interest paid on amount borrowed for purchasing the plot. The interest paid/payable for purchase of a house is allowable as deduction against income from house property. In case the house is self-occupied the deduction is, however, limited to a sum of Rs 1,50,000 per annum. In my opinion the borrowing made for purchase of a plot can’t be equated with the borrowing for the acquisition/construction of a house.
Entitled to claim deduction
Q. I intend to avail loan against the security of bank STDR for carrying repairs to the house owned and occupied by me. I had purchased the said house in November 1996. I have since retired from bank and receive pension. I am 65 years old. Banks deduct TDS on the interest accrued/received on the STDRs. Please advise me whether I can avail exemption for the interest paid on loan. If so, then under which Section? Alternatively, may I set off interest paid against interest received (earned) show net amount difference between the two loans against STDR will be adjusted as and when the same falls due. Though the loan interest availed for a short period same will be adjusted within a month or so. The house has not let out on rent. — Sudarshan Kumar Jain A.
You would be entitled to claim a deduction in respect of interest paid on loan raised from bank for carrying out the repairs and renewal to the house owned by you. Such a deduction is allowable under Section 24 of the Income-tax Act 1961 (the Act) against income from house property. The deduction would be allowable for a sum not exceeding Rs 30,000 for the year. Such a deduction would be allowable even if the house has not been let out.
Stamp duty charges
Q. We have a residential house of 272 sq yard in Rajpura, Punjab. It is in the name of my mother and I want to get it transferred in my name. What are the stamp duty and registration charges for transfer of deed in my name? — Navjyot A.
The stamp duty and the registration charges may please be checked up with the Sub-Registrar’s office as these vary on the basis of amendments in the Stamp Act applicable to a particular state.
The writer can be contacted at sc@scvasudeva.com
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Vaastu decoded
You must have noticed that your LPG cylinder empties slower in summer than winter. This is because the ambient heat in summer is higher. Following the same principle, if the kitchen is located in the hottest zone of the house, then fuel consumption would be minimal. This would in turn mean more savings.
We all know that the sun rises in the east and sets in the west. As India is in the northern hemisphere, the sun’s movement is through the southern skies. So the southeastern corner is recommended for the house’s hotspot. For the sake of hygiene, don’t have a toilet next to or a septic tank underneath the kitchen. And to keep the risk of fire low, avoid having a store inside the kitchen. Keep the heating apparatus on the southeastern corner of the kitchen and the sink, water containers and refrigerator in the northwestern corner to avoid conflict between the fire and water elements. Also, don’t put the overhead tank on top of the kitchen, as it would bring down the temperature in the kitchen. In turn, the kitchen heat will speed up evaporation of water in the tank. Have the tank as far as possible — on the northwestern corner of the house.
Going underground
As sunlight and fresh air cannot reach a basement easily, it should only be constructed in the northeastern corner. It should be at least 9 ft deep for proper air circulation and one-fourth of it should be above the ground. Windows and mirrors should be installed in such a way that sunlight and fresh air reaches the basement. Avoid conflict with Nature We are made of the same five elements as nature — earth, water, fire, air and energy. To prosper, we have to be in sync with nature, not against it. If you spend a lot of your time in stuffy and badly lit rooms and are exposed to heat in summer and chill in winters, your health would be adversely affected. Instead of using artificial light and air conditioners and hence paying heavy bills, put nature’s resources to use. (Concluded)
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GROUND REALTY Jagvir Goyal
The consumer has nothing to lose by switching over to CFLs. His power bill will scale down and that is always welcome. Only pain in the neck, though, is the initial cost of CFLs. Competition and government incentives may soon push down the cost of CFLs. It is therefore, time for the house-builders to know which CFL they should choose.
Here are a few tips: Choose high PF
The ‘power factor’ (PF) of CFLs plays a crucial role in deciding the amount of energy that is saved. CFLs with low PF may hardly save power. Power Factor is the ratio of the power used by the CFLs to the product of voltage and current supplied to it. It can lie anywhere between 0 and 1. Most of the CFLs have a PF of around 0.5. A CFL with low PF shall draw more current than a CFL with high power factor even if both are of the same wattage. CFL with PF of around 0.8 is a good choice.
ROHS compliant CFL All CFLs are not ROHS compliant. ROHS stands for ‘Restriction of Hazardous Substances’. It is also called Lead Free Directive. Hazardous substances are lead, mercury, hexavalent chromium, cadmium, PBB (Poly Brominated Biphenyls) and PBB PBDE (poly brominated di-phenyl ether). The last two substances are flame retardants and are used in plastics.
ISI mark
IS 15111 Part 1 & 2 cover the safety and performance requirements of CFLs. These standards cover rated wattage up to 26W and rated voltage up to 250 Volts. An ISI marked CFL will always be safer and long lasting.
Right wattage
An 11W CFL gives illumination equivalent to 60W Tungsten filament GLS (General Lighting Service) lamp. A 20W CFL is equivalent to 100W GLS. General formula is that 1 watt of CFL gives illumination equivalent to 5 watts of GLS. So replace your 25W GLS with 5W CFLs, 40W bulbs with 8W CFLs, 60W bulbs with 11W CFLs, 100W lamps with 20 W CFLs and 200W lamps with 36W CFLs.
No liquid mercury CFL
Many CFLs are produced by using liquid mercury in them. Such CFLs are cheaper than others. Liquid mercury is harmful to environment. Also, when liquid mercury is used, the prescribed ISI norms on weight of CFLs are hard to meet. Disposal of used CFLs that contain lead or liquid mercury is harmful for water and environment. So prefer the CFLs that are marked ‘liquid mercury free’.
Brand power
All CFLs may look similar but all are not the same. Market has a variety of them. For the consumer, cost difference is the only criteria for choice. Choose a CFL produced by a reputed manufacturer.
Digest cost factor
The biggest deterrent behind non-usage of CFLs is their initial cost. However it is a proven fact that combined with the power saved, these lamps prove cheaper than conventional lamps. A genuine 11W CFL is priced around Rs 125, a 15W CFL at Rs. 130 and a 20W CFL at Rs 180. Due to government incentives, there are discounts available on these prices.
Save environment
Whenever a CFL gets fused, don’t throw it in the dustbin. CFLs may contain mercury. If thrown in dustbin, these get broken, causing environmental pollution. Take it to the CFL seller and hand it over to him. Sellers further handover all fused CFLs to processing units who extract the mercury out of these and re-use it.
LED LIGHTS
Reputed companies are now producing LED lights and luminaries for the consumers. LED means Light Emitting Diode. One LED emits little light. Therefore, in a LED lamp, a number of LEDs are combined. These have no glass or filament in them. Nor do these contain any mercury. These are very costly but have a long life. The future belongs to LED lighting. In case you plan to buy LED lights, keep following points in mind:
Not for general illumination
LED lights available in the market are not suitable for general illumination. These are suitable either for decorative purpose or at the maximum for task light where these focus on a particular spot. LED lights usable for general illumination are expected to arrive in the market soon.
Only for recess mounting
Most of the LED lights launched are suitable for recess mounting. These can, therefore, be fixed in false ceilings only. Edison screw type LED lights are easy to install but have not arrived in India so far. These can be screwed in the holder like a normal bulb or CFL. Some Chinese lights have arrived and these are quite cheap also but are not reliable at all.
White light LEDs
LED lights are known to emit multiple colours. However, for visibility, white light similar to daylight is necessary. Therefore, for task lighting, LED lights that emit ‘daylight white’ light may prove suitable. Before buying their light-spread and brightness should be checked by the user. Coloured lights can be chosen for decorative purpose.
‘No UV’ lights
While choosing LEDs for whatever purpose, it should be ensured that these don’t emit any ultraviolet (UV) radiations. Check the manufacturer’s written specifications on the box to ensure this.
Long-life
LEDs are supposed to compensate their initial higher cost through energy saving as well as very long life. The LED lights have a life of 50,000 hours or so. This means that if a light is kept on for 10 hours per day, then it would last for more than 13 years.
LED wattage
LED lights consume very little electricity. The recess mounted lights now produced are of 1X3 W, 3x1W, 4x3 W, 16 W and 48 W. LED lights have a wide range of operating voltage and can operate at 110 V to 240 V, AC supply.
Cost factor
Presently, the LED lights manufactured by reputed manufacturers are very costly (around Rs 2100 approximately). Chinese lights are cheaper but there is no use buying them. It is hoped that cost will come down once a greater variety of easy-to-use LED lights entered the market. (This column appears fortnightly)
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REALTY BYTES Eldeco had created a new benchmark in North India when it built Eldeco Mansionz in Gurgaon, now the same Mansionz concept has been brought to Ludhiana. Located inside the 78 acre Eldeco Estate One on GT Jalandhar Road– Eldeco Mansionz brings independent villa style living in a planned and well-maintained environment This township is going to offer shopping, schools, lifestyle club, service apartments apart from a range of housing options like villas, low rise floors and high-end apartments. All this will be set amidst wide roads; broadwalks, parks and children play areas. These European style independent villas offer a choice of 2 to 6 bedrooms options with an expandable concept to give you flexibility to buy it complete or build as per individual needs. The Group plans to enter Jalandhar next and has already acquired the land and licenses for the same.
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There is more to the quest for a home than mere economics and monetary considerations. ‘Home is where the heart is;’ and as one advances in years, the full import of this oft-repeated sentence assumes a different connotation. Home becomes more than a house; it is your own space where you can assert your will and enjoy freedom after a lifetime of struggle and hard work.
A major concern for RBI flows from the unusual rise in asset prices over the past six months or so, fuelled largely by excess liquidity in the system. Most central bankers in the world kept easy liquidity conditions during 2009 to fuel a faster recovery. However, the easy liquidity ended up escalating the existing asset prices, without creating any new productive assets. In India, too, the growth of private investment was hardly visible in 2009, which was clearly reflected in bank credit growth at single-digits.
Vaastu
decoded
n
What is the validity of stamp papers bought on August 17, 2007 worth Rs 49,000?
n
After possession of the plot, if I take more loan to construct the house shall I be entitled to get income tax rebate or not.
