|
|
|
|
| REAL ESTATE |
|
|
|
The revival mode
tax tips loan zone
market pulse
real comment
launch pad
|
|
|
|
The revival mode
Though the chill in the air has shown no signs of slackening so far in 2014, there are signs of a thaw in the realty scene in the tricity and its periphery areas in the new year.
While 2013 had been tagged as one of the most dismal years for the property market in the Chandigarh, Panchkula and Mohali area by market watchers, no miracles were foreseen for 2014 in view of the soaring inflation figures, low GDP growth and impending general elections. But the dark clouds of slowdown seem to be thinning as the realty market here has shown some movement over the past couple of months.
Winds of hope The market has stirred back to life as the end-user, who was in a wait-and-watch mode so far, is coming forth to finalise deals now. “In the tricity now the customer is out to buy. Over the past three months quite a few transactions have taken place and these have given some momentum to the listless market”, says R.P. Malhotra, a Zirakpur-based builder. With the buyers waiting for the prices to bottom out and sellers holding on to their assets, the volume of transactions was dismally low last year and this had led to stagnation”, says I.P. Singh Chadha, CEO of Abode Realtors. According to him there has been a substantial increase in the number of queries from potential buyers over the past month and even the response to sale purchase ads was very positive now. Commenting on the reasons for this change in buyer sentiment, he says, “The end user can now sense that a change in goverment in imminent after the elections and the real estate market will recover once a stable government is there at the Centre. Thus, the prices will appreciate by the end of this year, making it the right time to buy.” Echoing similar views Rakesh Kerwell, Director (North), DLF Ltd, says “Almost everybody is pinning hopes on the formation of stable government that would help in stabilising the economic scenario. The tricity market has already seen price correction to the tune of 25-35 per cent than the highs of 2010-11. This correction is across all segments — residential and commercial — and may be more pronounced in the case of the lesser known developers. Attractive offers are also being offered by the builders. So this is the right time to invest in property, especially for end-users. Also, the downturn of real estate cycle has been for three continuous years. So the feeling of positivity and anticipation of appreciation in property market is there and that is what is bringing the buyers out”.
Positive factors at play The area has a large number of big-ticket projects in Mohali, Kharar, Banur, Mullanpur, Panchkula-Pinjore Urban Complex, Zirakpur and Dera Bassi that have state-of-the-art facilities on offer. With names like Studio DRA, UK (Wave Estate, Mohali), Atkins, UK (Wave Estate), Shapoorji Pallonji (DLF Hyde Park Estate), Hafeez Contractor and Gian P. Mathur (Homeland Heights, Mohali) etc associated with the projects, the buyers are getting best things and at cheaper rates at the moment. “If one can get this standard of quality for, say around
Rs 4,400 per sq ft, then it is a steal”, adds Chadha. And the revival is not there just in the residential segment, there is good response in the commervial segement too. The commercial spaces in new projects on Landran-Banur road are getting good response from buyers. “The prices here are one third of those in the established sectors like 79-80 making these attractive options”, says Chadha. Apart from the price factor there are some other favourable growth drivers that are in play, especially in the Mohali area. The real estate growth of an area generally has a cycle of 7 to 8 years and the growth peaks at around 5 to 7 years. “Most of the projects in Mohali are at the 5 to 7 year time scale and are nearing completion, infrastructure, too, is in place now, so the end-user interest is more”, says Chadha. Recent developments like approval for big projects for New Chandigarh and allotment of land to Infosys in Mohali have also increased the realty potential of these areas. Another factor that has played an important role in adding momentum to the realty market and in building buyer confidence is the fact that a number of big developers, who have integrated townships projects lined up in the periphery areas, have started handing over possessions to the buyers. “Handing over of plots and residential units always brings in positivity in the market as it is at this stage that the tangible product is transferred in real terms to the customer. It further leads the customer/end-user in planning to move to the new property or build one, in case of plots. So habitation of the project starts happening, which further leads to other developments such as commercial, institutional etc. All this has a positive impact on the real estate market”, says Kerwell. In Mohali Emaar MGF that has one of the largest projects — Mohali Hills — on Landran-Banur road and was under the cloud of delay, has started handing over possessions of villas and apartments. The TDI group has also handed over possessions at its different residential and commercial projects within TDI City-I and II (Sector 117, 118, 119 and 110 and 111, Mohali). Families have already moved into Ansals group’s Orchard County in Sector 115 and in independent floors in its Sector114 project. GMADA’s mega project Aerocity that had seen very slow growth over the past almost four years is also ‘back in action’with the numbering of plots in progress right now. Though a recent entrant in the tricity market, DLF group is also gearing to hand over the possessions of plots in its Hyde Park Estate in New Chandigarh (Mullanpur) by sometime next month and of floors at its DLF Valley Panchkula over the next few months. With the market being end-user driven at the moment, the prices are not likely to go up considerably over the next few months. “The prices go up only when there are investors in the market, which is not likely to happen till mid-August”, says Malhotra. This, according to experts, will bring more end- users to the market. However, it remains to be seen to what extent these favourable factors will be able to revive the tricity realty scene.
|
|||
|
Do I need to pay tax on fully utilising capital gain? S.C. Vasudeva
A. Any profit arising on the transfer of a capital asset is taxable under the head capital gain. Therefore, in case the flat is sold after a period of three years from the date of purchase, the capital gain would be treated as a long-term capital gain and you would be entitled to claim the indexation benefit in respect of the cost of Rs 40 lakh incurred for the purchase of the flat. In case the flat is sold within a period of three years, the benefit of indexation would not be available and the amount of gain arising on transfer of the flat would be treated as a short term capital gain of Rs 10 lakh which would be included in your other income and would be taxable at the slab rate applicable to your total income. Apart from the indexation benefit, long-term capital gain is presently taxable at a lower rate which is 20.6 per cent (20 per cent + 3 per cent education cess thereon) and such long-term capital gain would not be chargeable to tax in case the amount of such capital gain is utilised for purchase or construction of a residential house within the specified period. Therefore, in case the proposed sale of the flat is after the period of three years and results in a long- term capital gain, it would not be essential for you to deposit the amount of capital gain in a bank under the capital gain scheme as you would be making a payment of sum of Rs 23 lakh immediately after the sale of the flat for purchase of another residential flat. Q. I had purchased a plot on January 10, 2008 for
Rs 40,000 only and sold it on November 14, 2013 for Rs 19,80,000. I have income from pension for 2013-2014 about
Rs 1,08,000 and interest on STDR Rs 1,40,000. Please advise me about my tax liability for 2013- 2014. —
Aamir Khan A. The amount of long-term capital gain on the basis of figures given in the query works out at
Rs 19,11,833. This computation has been made after giving the benefit of indexation from the financial year 2007-08 to financial year 2013-14. The indexed cost of the said land on the said basis works out at
Rs 68,167. The amount of long-term capital gain has thus been computed after deducting the said figure from the sale consideration of
Rs 19,80,000. The tax liability on your other income works out at Rs 4,944. The amount of long-term capital gain will be taxable @20.6 per cent thereon. The amount of tax on long- term capital gain, therefore works out at
Rs 3,93,838. The total tax liability in your case thus would be Rs 3,98,782. The above calculations are based on the presumption that you are not a senior citizen. In case you are a senior citizen, there will be no tax liability on your other income and your total tax liability will be
Rs 3,93,426 after adjusting the benefit of tax @20.6 per cent on Rs 2,000 being the difference between
Rs 2,50,000 and Rs 2,48,000 as the same is adjustable against the amount of taxable long- term capital gain. Should I pay capital gain tax?
A. Income from capital gain is taxable after taking into account the cost of acquisition of the capital asset, cost of any improvement thereon and expenditure incurred wholly and exclusively in connection with the transfer of a capital asset. The aggregate of the above sums is deducted from the full value of consideration received or accruing from the transfer of the capital asset so as to arrive at the figure of capital gain. The definition of term ‘transfer’ includes ‘exchange’ of a capital asset, and therefore, any exchange of capital assets would be covered within the term ‘transfer’ for the purposes of computing capital gain arising on the exchange of capital assets. In case of exchange of a capital asset with another capital asset therefore, one will have to take into account all three components for the purpose of computing cost of a capital asset that has been exchanged even if the exchange value i.e. full value of consideration for exchanged capital assets remains the same. In case, therefore, the cost components vary, the amount of capital gain would vary for the exchanged capital assets. It may be added that the benefit of exemption under Section 54 of the Act not being available in respect of capital gain arising on purchase of a commercial property, any excess of full value of consideration over the cost of components should be taxable either as short-term or long-term capital gain depending upon the period for which the capital assets were held. Section 50D of the Act provides that the fair market value of a capital asset would be deemed to be full value of consideration where such consideration cannot be ascertained. Therefore, for the purpose of considering the full value of consideration in the case of exchange of capital assets, the fair market value of the exchanged capital assets would be taken into account. This section would not change the method of computation of capital gain as explained.
email your queries to realestate@tribunemail.com
|
|||
|
Ask for loan top-up SC Dhall Q. I have purchased a flat of from reputed builder under down-payment option and through bank finance. The possession is expected in a few months’ time, but our builder posted a letter stating increase in cost due to increase in flat area and we need to pay within 15-20 days approximately Rs 4.55 lakh. They are quoting some rule under terms and conditions. Can we ask the bank for extra money and is it fair on the part of the builder to enhance cost like this? — A Sharma A. Most booking agreements for real estate projects start by emphasising the importance of being aware of the terms and conditions mentioned therein. But how many of us take the trouble of going through these agreements, drafted in detail by lawyers hired by developers? This is important because most clauses in these agreements are aimed at protecting builders from legal troubles while giving very few rights to buyers. The super built-up area (total area of your apartment along with your share of common areas such as lobbies, corridors, service areas, staircases and lifts) mentioned in the agreement is tentative and subject to change during construction. The cost of the property is re-calculated after confirmation of the super area. If there is an increase in it, the buyer is supposed to pay the increased price on demand. If there is a reduction, the refund will be adjusted in the final instalment. In both cases, no interest is payable. Implication: Though builders try to stick to the plan, you must be prepared for a 10 per cent variation in area during construction. If the area of your property rises, so will the cost. buyer must keep some extra money for this. You can approach you bank for a top up loan by giving a copy of the letter issued by the builder.
|
|||
|
market pulse
While many buyers think that the lending bank usually carries out all the checks before approving loan for a project, the reality is very different. It has been seen that banks are not doing enough to gauge the authenticity of housing projects before disbursing loans. There have been numerous cases in which loans have been sanctioned for projects for which the builders did not have licenses to develop residential colonies. Banks have even been found to have cleared loans to two or three persons for the same flat in the NCR.
Hair raising accounts Relating one such incidence Ashish Kaul, Vice-President of the Federation of Apartment Owners’ Association, Greater Faridabad, says that home loans had been sanctioned for about 80 per cent units in a society with 10,000 apartments even though its building plan had not been approved by the district town planner, Faridabad. Kaul got this information from a RTI reply. Shocked over the apathy of the banks, Kaul has not only complained to the Reserve Bank of India against the banks’ lack of due diligence in the Greater Faridabad case, but has also filed a PIL in the Punjab and Haryana High Court against what he calls the massive violation of the Punjab Scheduled Roads and Controlled Areas Restriction of Unregulated Development Act, 1963, which regulates building plans in plotted colonies. Meanwhile, more than 400 persons have been cheated of amounts ranging from
Rs 25 lakh to Rs 35 lakh after they fell prey to the promise of Shiv Kala Charms. They found that “their” apartment had been sold to multiple buyers and banks had granted overlapping mortgages on them. Mahipal Singh, Managing Director of NCR-based MMR group, admits that what has happened with the customers of Shiv Kala Charms has badly shaken the prospective investors in real-estate. “I feel that it is high time real companies either change or perish. Those realty firms who try dupe their customers can not survive in the market.” Prominent among these lenders are banks such as Axis, Oriental Bank of Commerce, Syndicate Bank and housing finance companies such as HDFC, LIC Housing Finance Limited (LICHFL), Dewan Housing Finance Corporation Limited (DHFL), Punjab National Bank Housing Finance and Indiabulls. On August 31, 2011, HDFC Bank came out with a list of 78 apartments in Shiv Kala Charms, stating that these had been legally mortgaged to the bank. This opened a can of worms. Buyers who had either taken loans from other banks or organised finances on their own were shocked to find their apartment numbers listed by banks with which they had no dealings. Among those who took notice of this list was Avneesh Kaushik, who filed a case against the developer in the economic offences wing (EOW) of Delhi Police. Kaushik bought apartment number 2093 on the ninth floor of tower 2 in the project in January 2008 with a home loan from Syndicate Bank. Unknown to him, the developer had sold the apartment to another buyer who was granted finance by LICHFL. It may be recalled that Shiv Kala Charms is a part of a cooperative society, Golf Course Sahkari Awas Samiti Ltd, which was formed in 2004. The society leased 9731.79 square meters of land from the Greater Noida Development Authority (GNIDA). In latest to this case, the Economic Offences Wing (EOW) of the Delhi Police has arrested a 47-year-old builder for allegedly cheating investors of a housing project in Greater Noida. The accused had allotted over 300 flats in a housing project that proposed availability of only 140 flats. The arrest came after those who had invested money in the project named 'Shivkala Groups' lodged complaints alleging that the company —Golf Course SahakariAwas Samiti — cheated them on the pretext of a pre-launch project. During investigations, the police found that multiple allotments of flats were made and financial institutions had advanced more than one loan on the same flat, but to different persons. There were also allotments in respect to non-existent flats.
Reasons for lapses Banks fail to carry out checks due to a number of reasons. According to a banking expert, “One reason is the nexus between a developer and a bank agent. Banks are in a dominant position to bully gullible homebuyers and so overlook safety norms knowing that it is the vulnerable buyers who will bear the brunt in case of a problem at a later stage.” Sanjay Khanna, Delhi-based director of Kailash Nath Projects says, “A buyer should be extra cautious and check all the necessary approvals that builders require before launching a project. Things are so messy in the realty sector as there is no regulatory authority to look into these issues.” There is also a feeling that many times banks disburse loans as they depend to a large extent on the legal advice outsourced to legal firms. Banks need to develop domain experts. The moral of these two stories are that would be buyers of flats need to be very careful in investing in any project.
|
|||
|
real comment
With the inclusion of Karnal and Jind districts of Haryana in the National Capital Region (NCR) recently, the region is about to witness an upsurge in its overall development. The pronouncement holds special significance for Karnal. The National Capital Region Planning Board (NCRPB) has taken the decision considering the need to progress beyond Delhi which is bound to open new possibilities for all 21 cities that are now a part of the NCR. Karnal, with its strategic location on the National Highway 1 (NH1) and huge socio-economic potential, can prove to be a perfect partner for Delhi’s plan for development. For Karnal it means a chance to let its highly-educated workforce explore the facilities of a metropolis and a significant rise in the employment opportunities in the city itself. The development will catalyse a partnership between the cities of the NCR with the NCRPB providing the much-needed infrastructure and platform for development. The NCR cities could pool their resources for economic and social development of the region. Currently, Karnal is home to national institutes for agricultural and dairy research like the Indian Agricultural Research Institute (IARI), Central Soil Salinity Research Institute (CSSRI), Directorate of Wheat Research (DWR) and National Dairy Research Institute (NDRI). Karnal is also known for its well-established rice processing industry. Being one of the agriculturally-rich districts growing foodgrains as well as horticultural crops, it has the potential of becoming the food processing hub of the region.
Positive points Karnal has the ability to absorb the influx of population which will come along with the industrial growth in the region. On the other hand Delhi's high population density at 11,297 people per sq km has an inverse relationship with the quality of life. While other NCR cities such as Panipat, Sonepat, Faridabad and Gurgaon are closer to the capital, Karnal offers a greater potential for growth. The city's well-developed civil infrastructure, availability of developable land, natural resources such as air and water, open green spaces and cleaner surroundings add to its attractiveness for residents of the NCR. The city offers housing facilities for all socio-economic classes with a current inventory of over 10,000 units available at relatively affordable prices. The lifecycle of real estate in Karnal is at a stage from where prices are bound to appreciate. In the last six years, real estate prices in Karnal have seen a near four-fold increase from around Rs 6,000 per sq yd in 2008 to Rs 22,000 per sq yd at present. With the average year-on-year growth of 35-50 per cent and the creation of a seamless connectivity with Delhi, Karnal will experience a significant capital appreciation in the future as well. Already the city is expanding with addition of new sectors and it is this potential that has attracted many world-class developers to invest Karnal.
The pitfalls In the current scenario, there is, however, an evident deficit in the political will to implement the Master Plan. If this continues, it could prove to be a dampener for the growth of real estate. For example, the delays caused by relocation of existing structures for the expansion of the NH1 and the regional road network have stalled real estate development in many pockets, affecting sentiments and the vitality of the market. Located along the NH 1, almost equidistant from Delhi and Chandigarh, Karnal will soon reap the benefits of improvement in connectivity with Delhi; uninterrupted flow of traffic, Mass Rapid Transit System (MRTS) and the proposed domestic airport. Yet, the movement of jobs, industry and human resource from Delhi NCR towards Karnal will depend on how quickly commuting-time is reduced between the two. Fast tracking the implementation of the MRTS, a prominent feature of the Regional Plan 2021 for NCR, can eliminate connectivity- related problems. However, if the case of Gurgaon and other NCR cities is any indication, the implementation of the same is bound to take some time. For plans to translate into reality for Karnal, a combination of persistent efforts and continuous supply of resources is required. Karnal's substantial scope for expansion, excellent educational facilities, esteemed institutions of higher learning and healthcare such as the Kalpana Chawla Medical Institute - all make it an ideal inclusion into the NCR. The move will not only benefit Karnal but can lead to a formation of a successful microcosm with potential to contribute significantly to the region's economy.
|
|||
|
launch pad
Real estate developer Utkarasht Group launched commercial complex — Atrium Neemrana in Alwar, District in Rajsthan recently. The new project will be spread over an area of 3,00,000 sq ft. It will have 215 studio apartments, nine food courts, multiplex and 367 shops. According to company spokesperson this will be the first of its kind commercial project in Neemrana. The launch price of studio apartments is
Rs 8,250 per sq ft. The project will be completed within three years.
Disney-themed interiors The Prestige Group has announced a licensing deal with Disney Consumer Products (India) to offer Disney and Marvel inspired interiors and exteriors at the Prestige Lakeside Habitat, in the heart of Bangalore’s IT hub, Whitefield. Located in Varthur, Whitefield and spread over a sprawling 102 acres, Prestige Lakeside Habitat will feature 3428 apartments and 271 villas. The family-friendly development offers one of the best environments for community living. The highlight of the property will be a Disney-themed landscape that will create an ethereal, fairy tale-like aura for all residing there. Disney-inspired rooms will consist of Disney-branded furnishing, home décor products, colour palettes and more, bringing alive the complete Disney experience for families. —
Based on information provided
by the developers
|
Property market in the tricity and its periphery is coming back to life with fresh transactions and possessions being handed over in the existing projects
With the inclusion of Karnal and Jind districts of Haryana in the National Capital Region (NCR) recently, the region is about to witness an upsurge in its overall development. The pronouncement holds special significance for Karnal. The National Capital Region Planning Board (NCRPB) has taken the decision considering the need to progress beyond Delhi which is bound to open new possibilities for all 21 cities that are now a part of the NCR.
Real estate developer Utkarasht Group launched commercial complex — Atrium Neemrana in Alwar, District in Rajsthan recently. The new project will be spread over an area of 3,00,000 sq ft. It will have 215 studio apartments, nine food courts, multiplex and 367 shops. According to company spokesperson this will be the first of its kind commercial project in Neemrana. The launch price of studio apartments is
Rs 8,250 per sq ft.
Q. I purchased a flat in a premier society in Dera Bassi during 2011 for
Rs 40 lakh after availing a loan of Rs 30 lakh from a bank. I now plan to sell this property for a sum of approximately
Rs 50 lakh and buying an under-construction flat in the same society by giving immediately an initial sum of
Rs 23 lakh with a construction-linked payment plan. The balance payment will be given in instalments over next two years. I also plan to clear my bank loan of remaining amount
Rs 27 lakh with the sale amount. Could you please clarify whether I need to follow the procedure of capital gain account and tax since there will be no balance. —
Jatinder Singh
Q. This is in regard to the reply to my query publishd in these columns (Dated January 11, 2014). I would further want to know about Section 50(d) if it would be considered in our case. My chartered accountant and income tax lawyer confirm that we will have to pay capital gain tax. —
Gurnam Singh
If you believe that the project in which you have booked your flat is free from all the issues just because your bank has cleared your loan application and approved the required amount — then it’s time to think again. 
