Timing is critical in finance, especially if you want to make a profit. Of course, you need to pick a good time to take advantage of the appreciation in value, but it’s equally important to keep an eye on the calendar to avoid paying a hefty amount as tax. It was a lesson learnt well by Mumbai-based Benny Abraham when he sold his house in 2011 within two years of purchasing it. “The property was fetching me nearly 60% in profits on the initial investment, so when I got an offer to sell it, I immediately agreed,” says Abraham, a brand consultant. Unfortunately, the 50-year-old had no clue about the tax implication of his hasty decision. Not only did he have to pay a substantial amount as tax on the profit, he also had to shell out the tax exemptions that he was availing of on the home loan.

This is because under the Income Tax Act, if you sell a house within three years of buying it, the tax benefits on the principal repayment and interest paid on the home loan are reversed. These are then included in your income when you file your tax return. Also, if a house is sold within five years of the end of the financial year in which it was purchased, all the deductions claimed under Section 80C with respect to the property are added to the taxable income in the year of sale.
Capital gain and indexation:
Real estate is regarded as an asset, so the profit from its sale is assessed under the head ‘capital gains’. According to Manish Thakkar, director of Mumbai-based Thakkar Consultants, if a property is sold within three years of buying it, it is treated as a short-term capital gain. This is added to the total income and taxed according to the slab rate. However, if you sell a property after three years from the date of purchase, the profit is treated as a long-term capital gain and is taxed at 20% after indexation. While you can avail of various tax exemptions in case of long-term capital gains, no such benefit is provided for short-term ones.

One of the advantages associated with long-term capital gains is the inclusion of indexation while determining the profit. Indexation is a method through which the seller is able to inflate the value of his assets. Since inflation reduces the value of an asset over time, it is essential to increase the initial cost of the house to calculate its current value. This is done by multiplying the original cost price with a factor that is issued by the Central Board of Direct Taxes. This factor tracks the increase in the general price level, or inflation, and is known as the cost inflation index (CII). It is notified by the central government for every financial year. The Income Tax Act considers 1981-82 as the base year with a cost inflation index of 100. So, the CII for 1982-83 is 109, and so on.
The indexed purchase price can be calculated as—purchase price x (CII for year of sale / CII for year of purchase).
The indexation of purchase price helps to reduce the net capital gain, thereby slashing the tax burden for the seller.

Reduce your tax burden:
You can claim tax exemption under Section 54 on the long-term capital gain on the sale of a house. “To avail of this exemption, you must use the entire profit to either buy another house within two years or construct one in three years. If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption,” says Pankaj Ghadiali, tax expert at PC Ghadiali & Co Chartered Accountants.
“Such capital gain exemption is reversed and the amount taxed as capital gain if the new property is sold within three years of the date of purchase/construction. This profit will be considered a short-term gain and taxed at the normal slab rates, not the 20% beneficial rate,” says Sonu Iyer, tax partner, Ernst & Young.

You can also utilise Section 54 (F) to avail of exemption on the longterm capital gain made from the sale of any asset other than a house. Again, the sale proceeds should be invested only in a residential property, not a commercial property or a vacant plot of land. However, to avail of this benefit, you should not own more than one house.
The long-term capital gain tax can also be saved under Section 54 (EC) if the capital gain is invested for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house. However, you can invest only up to 50 lakh in a financial year.

The sale proceeds will be calculated on the basis of the valuation adopted by the state’s Stamp Duty and Registration Authority and will not be the amount mentioned in the deed of conveyance. This is intended to cover the cases where a portion of the sale price is received by the seller as unaccounted for cash.

If you miss the due date:
It’s possible that you are not able to make the required investment to avail of the exemption on capital gains before the due date for filing your tax return. In such a situation, the amount of capital gain or net consideration, as the case may be, has to be deposited in a separate account in a nationalised bank under the Capital Gains Account Scheme (CGAS) before the last date of filing your return for the relevant year. There are two types of such accounts—type A is a savings deposit and type B is a term deposit. The interest rates for these are the same as those for regular savings and term bank deposits. The proof of the deposit can be attached along with the tax return in order to claim exemption.

Source
Times Property

In the real estate arena, it is often said that any time is a good time to invest. The soaring land, material, and construction costs, and labor shortage, lead to a higher output cost year after year. That is not all. The State government hikes the guideline values to generate more revenue for the exchequer. The last Union Budget hiked the service tax from 10 to 12.36 percent, leading to an overall increase in input costs. It is prudent for any real estate investor to invest early in housing, in order to take advantage of the bargain deals as well as to beat price increases.

In the real estate arena, it is often said that any time is a good time to invest. The soaring land, material, and construction costs, and labor shortage, lead to a higher output cost year after year. That is not all. The State government hikes the guideline values to generate more revenue for the exchequer. The last Union Budget hiked the service tax from 10 to 12.36 percent, leading to an overall increase in input costs. It is prudent for any real estate investor to invest early in housing, in order to take advantage of the bargain deals as well as to beat price increases.
Just visualize this scenario. The construction costs have gone up by 18 percent over the last two years, taking into account price increases in the four key construction components alone – steel, cement, labor and brick. With the impending petroleum product price hike, yet another round of price escalation on all input costs is likely in the coming months. The cascading impact of all this is on the overall housing costs.
The demand for housing across major cities including Bangalore over the next five years is expected to be around two million units, and the demand will exceed supply by 130 percent, according to reports. The mismatch between demand and supply will push up housing costs.
According to industry sources, construction costs vary from around Rs 1,700 per sqft. depending on the specifications. For ultra-luxury apartments, it goes even upwards of Rs 7,000 per sqft. For affordable housing projects with no frills, construction costs vary from Rs 1,300 per sqft to Rs 1,500 per sqft. The major impact on input costs has been felt because of critical products such as steel – the steep increase in the price from Rs 33,000 per ton to Rs 50,000 ton in a span of just six months.
The hike in construction costs as a result of a combination of factors has necessitated property developers to go in for innovations in technology through efficient management of human resources, value engineering, designing etc. Even the import of building materials from countries such as China is not considered viable any longer. Increasing emphasis on project management techniques is being laid to derive the cost advantage.
Increasing labor shortage and costs are major deterrents that push up the construction costs. The construction industry is the second largest industry contributing to the nation’s GDP and Credai estimates the industry will require more than 1.25 crores of skilled labor in the coming years. This translates into a need to produce at least 25,000 skilled labor personnel every year.
There is increasing concern now that the industry will be hit by a shortage of skilled workers in the coming years. The Federation of Indian Chambers of Commerce and Industry (FICCI) and Royal Institution of Chartered Surveyors (RICS) have both warned that the sector can be starved of proper staff. By 2020, the construction industry will need five million civil engineers, architects and planners but the country is expected to produce fewer than one million of these professionals, says RICS.
The Reserve Bank’s rate cut by 50 basis points translates to 3.2 percent decrease in EMIs. Also, doing away with the prepayment penalty will go a long way in relieving homebuyers of the burden. Industry observers feel housing costs are unlikely to come down in the coming months in the wake of further cost hikes due to federal levies being planned shortly. For end users or investors keen on getting a lucrative yield on a real estate investment, the timing is just appropriate to strike bargain deals and any delay will mean buying a higher cost.

Source
Times Property

Courtesy
THE INDEPENDENT
Mauritius

Skyscrapers are being constructed showcasing the development of the construction industry and living happily in a cosy villa has become the
dream of many people. Mr.Nikhil Thard, Managing Director of India-based Edifice Builders, is actually in Mauritius to propose villas in the south Indian city of Bangalore, coined as the Silicon Valley of India, to potential Mauritian buyers. The company works on a very simple philosophy. Our idea is to create beautiful properties and at the same time do good business.

“The company works on a very simple philosophy. Our idea is to create beautiful properties and at the same time do good business.”

Courtesy
LE MATINAL
click here to read the article on LE MATINAL

The six-lane elevated 3.72 km road over the existing road to the international airport has changed the topography of the area. This elevated project by the National Highway Authority of India (NHAI) is at various stages of construction from Hebbal to the Yelahanka railway-under-bridge. Estimated at a cost of Rs 608 crores, the toll rates on this route will be revised once the project is completed and the drive to the airport becomes seamless and signal-free.
Though the elevated project is not continuous and runs only up to a distance of 3.72 km, the remaining 4-5 junctions on this stretch will have either flyovers or underpasses. At least two flyovers, two underpasses, one pedestrian underpass and one cattle underpass will be constructed on this road by the NHAI. 
Along with this significant infrastructure project to the international airport, there are also plans to extend the Metro line from Hesarghatta up to the airport. These significant projects will add value to property along this route.
The region has a demand for residential, commercial and retail spaces. With plans for the development of an aerospace Special Economic Zone (SEZ), IT SEZ and creation of separate workspaces in the vicinity of the airport, there is also a huge supply of residential layouts.
The upgraded connectivity to Peenya will also add value to the development in the region. The Y-shaped C N R Rao Road underpass will ensure smoother traffic flow towards Yeshwanthpur-Malleswaram and Yeshwanthpur-Mekhri circle. The Doddaballapur Road, Hennur Road and Hebbal areas that are connected to the international airport road are now hotspots for property development.
The plan to make the Outer Ring Road (ORR) a signal-free, seamless corridor will have far-reaching implications on the growth along its route. The stretch from Hebbal flyover to Benniganahalli has scope for commercial development. A number of residential projects along here will result in a reasonable number of commercial developments too.
The connectivity from Old Madras Road to Devanahalli too is another significant factor that has led to realty development in this corridor. Commercial spaces, retail outlets, hotels and residential projects will generate good investment returns due to their proximity to the international airport and ambitious infrastructure projects.

Source
Times Property

The Union Budget and the new financial year are around the corner. It is time to make financial plans and review investment portfolios. You need to evaluate your taxsaving options after factoring in the changes that may be effected in the Budget. Very often, many tax-payers choose to leave investing in the tax-saving options till the end of the financial year. This means having to choose at the last minute in a hurry. It will mean a compromise on the quality and yield. Moreover, it may also mean picking instruments that don’t suit your other needs.

In the case of property, the equations are very different. Unlike as in insurance or tax-saving mutual funds, there is more to a property investment even though the tax-saving benefit is significant.
Against the interest paid on a home loan, the tax deduction allowed is up to Rs 1.50 lakhs per annum in case of a residential property that is showed as selfoccupied. This is under Section 24(B) of the Income Tax Act. In case the house is let-out or deemed to be let-out, the entire amount of interest paid is deductible while arriving at tax payable for the year. The tax benefit under this section is available on every property purchased – not just for the property in which you reside. The higher benefit extended to property let-out is to encourage the growth of rental property inventory as a measure to address the housing units shortage in the country.
In addition to this, there is the tax deduction benefit against the repayment of the principal component of a home loan. You get a tax benefit of Rs 1 lakh per annum under Section 80C. Then there is the one percent interest subvention scheme on affordable homes costing below Rs 20 lakhs. These figures could turn more attractive in the coming Budget, given the thrust on housing the government has had in the past.

These benefits make property a tax-efficient investment option that also yields high returns in terms of both rent and capital appreciation. In case of property as an investment avenue, the factors that have a bearing on yield are different. It is therefore prudent to plan this investment carefully and in the very beginning of the financial year to take maximum advantage of both tax benefits and its potential returns.
The indications of the inflation rate beginning to come down makes for pleasant reading for all those in the market for a home. The Reserve Bank of India (RBI) did not effect any hike in the key interest rates in the last Credit Policy review and could begin to soften its stand in the coming quarters. The hardening in interest rates has had a negative impact on growth, and some easing is expected to trigger more economic activity and growth. The moderation in demand with the hardening in the Credit Policy is contributing to cooling off in the inflation rate. The consumption-driven double-digit inflation rate was well beyond the comfort level of 4-5 percent.
It is now realistic to expect a downtrend in the lending rates as they seem to have peaked. Given the cyclical nature of lending rates, it makes economic sense to move even as indications of a downtrend are showing up. Timing the market cycles has never been easy.
So, as the new financial year begins, it is time to plan a property investment with the tax benefits and favourable rates in the market at this point in time in mind. The city is growing in all directions. The State government has major infrastructure plans to augment connectivity. Upgraded State highways, developed arterial roads and extension of the Metro Rail lines, apart from the elevated roads, will change the character of many localities on the outskirts. The rates here are bound to go up as they come closer to the city in terms of travel time with these connectivity projects taking off. The new financial year will bring with it opportunities in property as an investment avenue. The sooner you begin planning, the better your investment will pay.

Source
Times Property 

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Catch us at
Show: Indian Property show 2012
Date: 9th and 10th of March
Venue:  JW Marriot, Abu Bakar Siddique Road,
Mobile: 0504776546 / 0567882348
India Contact Number: +91 93420-59000
Mail: info@edificebuilders.com
Stall: No. A22

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The event details follows:

Show: CREDAI SBI Realty Expo 2012

Date: 24Th,25th – 26rd February 2012

Venue: SBI Head office, St.Marks road, ST.Grounds

Stall: No.A6

We are at Stall No- A6