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Old 31st January 2014, 11:36   #1381
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Both cases, private and gvt banks approved flats that did not have complete paperwork. However, title search + approval search by a lawyer would have turned up red flags.
Further information to support this argument by netfreak: http://fraudbuilder.wordpress.com/tag/bangalore/

It's written quite sarcastically, so learn to read between the lines!

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Further information to support this argument by netfreak: http://fraudbuilder.wordpress.com/tag/bangalore/

It's written quite sarcastically, so learn to read between the lines!
Just an excerpt

Then how do banks approve the loans without OC since all of you anyway buy flats everyday all over Bangalore? (Occupancy Certificates)


During the construction of the project, banks too, just like you, are not aware or will not know to what extent the builder will deviate from the approved plan. So, the question of deviation or OC can not be guaranteed even by the bank. Since banks exist in this world to do business and not bother about your OC, they will give you the loan during construction stage anyways (as they do not know about deviation since the builder will not tell the bank or you nor do you care. You care only about your bank loan. Period).


When you put up your flat for resale the next guy who comes to buy your flat can not buy it from you if you dont have a OC for the complex. Since this new buyer will also depend on a bank loan to purchase it just like you, he will not be able to buy it as his bank will reject the Loan Papers for want of the OC that you could not provide (since your builder did not provide it to you). The bank while processing papers for his loan, will ask you and him for Khatha certificate which you will not be having for want of OC the OC which you never got from your builder. So, what do you do now? Throw the baby with the bath tub out of the window?

Last edited by benbsb29 : 31st January 2014 at 17:29. Reason: Merged back-to-back posts.
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Old 31st January 2014, 21:04   #1382
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I have been in Bangalore since mid 2005. All this while, my parents used to stay in Delhi in our little 2 BHK there. Finally after numerous unsuccessful attempts, I managed to convince them to sell off that property and move to Bangalore.

Me and my younger brother each own a 3 BHK in the same apartment complex where we stay with our wives. I have a 1.9 years old kid who has just started to go to playschool, and my brother has just been blessed with twin girls.

The sale transaction of our Delhi home has fetched us some Rs.1.25 crores. Now in order to avoid the capital gains tax, which apparently is 20 percent as per a CA, my parents want to invest this money in another 3 BHK apartment in the same complex where we stay. Though it would be of immense help both for me and my brother, since my parents are required to take care of the kids as all of us are working, I am really not convinced of the move. Why do we need so much real estate? Both me and my brother own big enough homes to accommodate my parents.

Is there no other way to avoid the capital gains tax? Where else can this money be invested? Some suggestions would be really helpful.

Last edited by Oxy : 31st January 2014 at 21:06.
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Old 31st January 2014, 21:16   #1383
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I believe there are Nabard bonds that can be purchased to avoid capital gains tax but they offer poor returns of around 6‰ or so. They also have a lock in period I believe and the interest income from the bonds is also taxable.

Last edited by sdp1975 : 31st January 2014 at 21:21.
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Old 31st January 2014, 21:16   #1384
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Originally Posted by Oxy View Post
I have been in Bangalore since mid 2005. All this while, my parents used to stay in Delhi in our little 2 BHK there. Finally after numerous unsuccessful attempts, I managed to convince them to sell off that property and move to Bangalore.

Me and my younger brother each own a 3 BHK in the same apartment complex where we stay with our wives. I have a 1.9 years old kid who has just started to go to playschool, and my brother has just been blessed with twin girls.

The sale transaction of our Delhi home has fetched us some Rs.1.25 crores. Now in order to avoid the capital gains tax, which apparently is 20 percent as per a CA, my parents want to invest this money in another 3 BHK apartment in the same complex where we stay. Though it would be of immense help both for me and my brother, since my parents are required to take care of the kids as all of us are working, I am really not convinced of the move. Why do we need so much real estate? Both me and my brother own big enough homes to accommodate my parents.

Is there no other way to avoid the capital gains tax? Where else can this money be invested? Some suggestions would be really helpful.
No go. If you want to avoid capital gains tax, you have to reinvest. Or else, pay the tax and move on. Which doesn't make sense.

Why don't you scout for good property with nice appreciation and buy that for them, and give them the rental income? And keep your parents with yourselves? You don't have to buy an apartment in your complex just to solve capital gains issues. Get into the market and do an actual investment in real estate. 1.25 is a nice sum of money and if you and your brother want to put in a little money to bump it up to say 1.5 or 1.8, it will net you a great 3 bed room fancy apartment which will fetch you a tidy 50-60k rent a month 2 years from now. That's great pocket money.

And whatever you do, make sure you hire a good lawyer to comb the papers real well.

All the best
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Old 31st January 2014, 21:19   #1385
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Quote:
Originally Posted by Oxy View Post
I have been in Bangalore since mid 2005. All this while, my parents used to stay in Delhi in our little 2 BHK there. Finally after numerous unsuccessful attempts, I managed to convince them to sell off that property and move to Bangalore.

Me and my younger brother each own a 3 BHK in the same apartment complex where we stay with our wives. I have a 1.9 years old kid who has just started to go to playschool, and my brother has just been blessed with twin girls.

The sale transaction of our Delhi home has fetched us some Rs.1.25 crores. Now in order to avoid the capital gains tax, which apparently is 20 percent as per a CA, my parents want to invest this money in another 3 BHK apartment in the same complex where we stay. Though it would be of immense help both for me and my brother, since my parents are required to take care of the kids as all of us are working, I am really not convinced of the move. Why do we need so much real estate? Both me and my brother own big enough homes to accommodate my parents.

Is there no other way to avoid the capital gains tax? Where else can this money be invested? Some suggestions would be really helpful.
Are you aware that the tax is not on the entire 1.25 Cr? There is the initial cost of property plus adjustment for cost inflation. Here is a link to calculate
http://finotax.com/income-tax/cgcalc

Also, certain bonds can be bought with that money which are tax exempt if kept for 3 years. I would also like to get more info on the same so I will watch the thread too
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Old 31st January 2014, 22:57   #1386
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Default Re: The Property / Real Estate Thread

Buy a plot. You can always sell that off later when you and your brother are much older and fund some other priority at that time. Perhaps the three children's foreign education or something like that.


Quote:
Originally Posted by Oxy View Post
I have been in Bangalore since mid 2005. All this while, my parents used to stay in Delhi in our little 2 BHK there. Finally after numerous unsuccessful attempts, I managed to convince them to sell off that property and move to Bangalore.

Me and my younger brother each own a 3 BHK in the same apartment complex where we stay with our wives. I have a 1.9 years old kid who has just started to go to playschool, and my brother has just been blessed with twin girls.

The sale transaction of our Delhi home has fetched us some Rs.1.25 crores. Now in order to avoid the capital gains tax, which apparently is 20 percent as per a CA, my parents want to invest this money in another 3 BHK apartment in the same complex where we stay. Though it would be of immense help both for me and my brother, since my parents are required to take care of the kids as all of us are working, I am really not convinced of the move. Why do we need so much real estate? Both me and my brother own big enough homes to accommodate my parents.

Is there no other way to avoid the capital gains tax? Where else can this money be invested? Some suggestions would be really helpful.
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Old 31st January 2014, 23:04   #1387
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Quote:
Originally Posted by Oxy View Post
I have been in Bangalore since mid 2005. All this while, my parents used to stay in Delhi in our little 2 BHK there. Finally after numerous unsuccessful attempts, I managed to convince them to sell off that property and move to Bangalore.

Me and my younger brother each own a 3 BHK in the same apartment complex where we stay with our wives. I have a 1.9 years old kid who has just started to go to playschool, and my brother has just been blessed with twin girls.

The sale transaction of our Delhi home has fetched us some Rs.1.25 crores. Now in order to avoid the capital gains tax, which apparently is 20 percent as per a CA, my parents want to invest this money in another 3 BHK apartment in the same complex where we stay. Though it would be of immense help both for me and my brother, since my parents are required to take care of the kids as all of us are working, I am really not convinced of the move. Why do we need so much real estate? Both me and my brother own big enough homes to accommodate my parents.

Is there no other way to avoid the capital gains tax? Where else can this money be invested? Some suggestions would be really helpful.
Hi why don't you or your brother make a paper sale of one 3bhk in your dads name.

you will miss on tax breaks but save on interest. also capital gain stays home,
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Old 1st February 2014, 13:09   #1388
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Thanks for the great suggestions guys!

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Originally Posted by ritz3645 View Post
Hi why don't you or your brother make a paper sale of one 3bhk in your dads name.

you will miss on tax breaks but save on interest. also capital gain stays home,
This seems to be a brilliant idea. How does it work? Won't I be liable to pay the capital gains tax after the paper sale?
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Old 1st February 2014, 14:28   #1389
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Thanks for the great suggestions guys!



This seems to be a brilliant idea. How does it work? Won't I be liable to pay the capital gains tax after the paper sale?
Yes, it could end up like a tail chasing idea. If your apartment is less than 3 years old then you end up paying STCG instead of LTCG no?

I found a link on the bonds I was referring to earlier. Since you are in the end of one FYear, you can buy for 50 lacs before march 31st and another 50, after April 1. However, like everything else, professional advice must be sought. And please update us once you get professional advice

http://taxguru.in/income-tax/tax-ben...ital-gain.html
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Old 1st February 2014, 16:24   #1390
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What are your experiences dealing with property lawyers to vet documents from builders in Bangalore? What kind of prices do they charge? Is it a flat rate or is it a % of the property price (which I find ridiculous).

I'm looking for someone to help me vet a few documents.
Its a fixed charge between 5 to 10 k.
Beware that you will not find any property without zero issues so you need to take your informed decisions.
Few examples of issues which lawyers warn against but you may need to ignore are.
1. Unequal clauses in usage of common amenities like clubhouse.
2. Builders retaining ingress egress rights and right to refuse certain post sale activities.
3. In case of joint property development usually a share of land owner in builtup area is mentioned with put clear markings and flat number.

Always go to an independent lawyer and do not depend on report of banks legal team.

Last edited by amitk26 : 1st February 2014 at 16:25.
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Old 12th February 2014, 11:32   #1391
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The situation in Bangalore ,where I stay, is a mixed bag. While there certainly are opinions of doom and gloom, there are also free spenders who are still lavish in their spending. I can't help but actually feel SCARED when I see the prevailing property prices, even though the rates have cooled off just a bit recently. While the ET article was rubbish, the IT folks (including me) certainly need to tighten belts a bit to scrape along through the current situation.

Property prices in Bangalore are ridiculously high. Almost artificially so in fact. (This is purely my opinion.)

For example, for the asking price of one of those villas near the airport - "starting at Rs. 6.5 Crores" one can actually buy two villas next to a golf course, including the golf membership, in Mauritius!

Another parallel, for this kind of price, one can buy a nice home with a garden in a country town, just outside of one of the bigger cities in the UK or in Sweden.

The thing is, that the surroundings and infrastructure in our country cannot be compared with that of those countries where things work much better overall.

So why on earth would one want to pay such a price for such a villa here?

Especially, more so, when these builders appear to be factoring in all the possible inflation of the next twenty years in the price they are asking for today!

Crazy isn't it?
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Old 12th February 2014, 11:51   #1392
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Originally Posted by shankar.balan View Post
Property prices in Bangalore are ridiculously high. Almost artificially so in fact. (This is purely my opinion.)

For example, for the asking price of one of those villas near the airport - "starting at Rs. 6.5 Crores" one can actually buy two villas next to a golf course, including the golf membership, in Mauritius!

Another parallel, for this kind of price, one can buy a nice home with a garden in a country town, just outside of one of the bigger cities in the UK or in Sweden.

The thing is, that the surroundings and infrastructure in our country cannot be compared with that of those countries where things work much better overall.

So why on earth would one want to pay such a price for such a villa here?

Especially, more so, when these builders appear to be factoring in all the possible inflation of the next twenty years in the price they are asking for today!

Crazy isn't it?
Completely agree with your points. In fact even the luxury flats and villas going for INR 1.5 crores are way overpriced, and that's putting it mildly. The less said about the builder/politician nexus the better. Looks like putting together four walls and a roof is going to remain a pipe dream for folks like me in Bangalore.
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Old 12th February 2014, 12:32   #1393
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Completely agree with your points. In fact even the luxury flats and villas going for INR 1.5 crores are way overpriced, and that's putting it mildly. The less said about the builder/politician nexus the better. Looks like putting together four walls and a roof is going to remain a pipe dream for folks like me in Bangalore.
It need not remain a pipe dream.
All you have to do is to scout for a decent developer and buy a villa plot in a place of your choice and as per your budget.

Then you can build your nice little dream house on it at a fair and reasonable cost with first class materials using the services of a good architect and interior decorator.

Don't forget, irrespective of whether you live in a regular "average joe" community or in an aspirational super-luxe, expat, top-honcho or "phoren-returned" oriented community, you will still have to drive your car or bike on our normal Indian roads with their potholes and traffic jams and your fancy Audi or RR or Jag or Aston will be rubbing fenders and fetlocks with the average joe's A Star or Ritz or E20 and the local yokels' AutoRickshaws and Cycle carts as well.

Last edited by shankar.balan : 12th February 2014 at 12:35.
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Old 12th February 2014, 12:51   #1394
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Looks like putting together four walls and a roof is going to remain a pipe dream for folks like me in Bangalore.
I would suggest if you are not a big fan of swimming pools/fancy clubs - you can look at resale property which is 10-15 yrs old in apartments built by prominent builders like Purva/Sterling/Brigade etc.

You will get much more realistic price since end users are the only people buying these and not investors - so you get good location and realistic price. Only downside is that these buildings are old and not with many modern facilities. Still my personal view is that 10-15 years ago builders were using quality material - its only now that even big builders are doing cost cutting and using inferior products. The life of these old buildings in some cases will outlast that of modern day construction.

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It need not remain a pipe dream.
All you have to do is to scout for a decent developer and buy a villa plot in a place of your choice and as per your budget.
Don't you think its easier said than done. It takes a lot of time and scrutiny to validate the land titles and most of the decent builders offer land too far away from the city center. And also i don't think banks provide 80-85% loan to the villa plots - as against flats.
Not to forget Bangalore has huge water crises, and in your own plot you are left alone to get water connection to your house - whereas in an apartment that headache is taken care of by the administration/RWA.
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Old 12th February 2014, 12:56   #1395
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Quote:
Originally Posted by shankar.balan View Post
It need not remain a pipe dream.
All you have to do is to scout for a decent developer and buy a villa plot in a place of your choice and as per your budget.

Then you can build your nice little dream house on it at a fair and reasonable cost with first class materials using the services of a good architect and interior decorator.
You make it sound easy, but for most people, it's not practical. Buying even the smallest possible piece of land in Bangalore will cost atleast 20-25 lakhs, which an average joe wouldn't have.

Yesterday I asked my bank (Bank of Baroda) about their interest rates for a loan to buy a plot. I was told that if I go for such a loan, I would need to construct a house on that plot within two years. Now this kills the purpose for anyone who wants to invest in a piece of land and then sell it off in another 5-10 years time.

Even if you consider construction, you would need to be at the site almost everyday, for supervision. Else who knows how your material is being used. This is practically not possible for an average guy working in an IT firm. Hence the reason people prefer going for ready made apartments and villas.

I think we are going off topic here. Can the mods please move these couple of posts to the Property/Real Estate thread?
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