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Tax Treatment & Registry

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Tax Treatment & Registry

Last updated: November 20 2012
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  • Tax Treatment & Registry

    I am negotiating a plot (in development, not yet registered) with original BSP of 20K per yard.

    The cheque amount that seller is willing to take is 40K per yard?

    Please note that plot is still under development and will be transferred by the builder to my name.

    My questions are -

    1. Once the possession is offered by builder, at what amount will the plot be registered? SBI folks told me that registry will happen at 20K per yard

    2. If later i sell the plot for 60K per yard, will the capital gain be treated from 20K or 40k?

    3. SBI is only financing it at 20K per yard. But other banks such as PNB housing finance are willing to do at 40K per yard. Is there a catch?

    Any guidance will be a big help?
  • #2

    #2

    Re : Tax Treatment & Registry

    If seller is agreeing to make agreement to sale for entire 40K and is taking the cheque amount in the plot holder's name, then the capital gain for you would be calculated on 20K (assuming you sell later at 60K). Usually bank consider most conservative cost for loan assuming tomorrow you fail to pay then what is the minimum cost they can recover from open market. So in your case it would be close to builder selling price i.e. 20K or cirlce rate for that area which ever is higher. Bank may consider higher value if people are making registry of plots in nearby area of similar location at higher price.
    You can check on what basis PNB is willing to finance at 40K while SBI is not though valuation criteria for PSU banks are generally the same. Anyways it is the risk of bank and you need not worry much.

    Comment

    • #3

      #3

      Re : Tax Treatment & Registry

      Mr Gutpa,

      1) Make sure you keep the ATS for the transaction which shows that you bought the plot at 40k psy. Using this the capital gain would be calculated from 40k to 60k. The capital gain from 20k to 40k would be paid by the existing seller. It is his liability not yours. You bought the plot at 40k.

      2) Secondly the registry should happen at 40k. Most builders have a clause in their transfer agreement that you are willing to pay the increase in registration charges due to your increased BSP. Double check your builder's transfer agreement for the same. If this clause is there, you will have to submit a copy of Agreement To Sale to the builder which will show you bought the plot at 40k psy, I dont think there is anyway you can pay registration at old rate.
      You will have to pay the registration at 40k. Double check your builder's transfer agreement.

      Thanks










      Originally posted by nc_gupta View Post
      I am negotiating a plot (in development, not yet registered) with original BSP of 20K per yard.

      The cheque amount that seller is willing to take is 40K per yard?

      Please note that plot is still under development and will be transferred by the builder to my name.

      My questions are -

      1. Once the possession is offered by builder, at what amount will the plot be registered? SBI folks told me that registry will happen at 20K per yard

      2. If later i sell the plot for 60K per yard, will the capital gain be treated from 20K or 40k?

      3. SBI is only financing it at 20K per yard. But other banks such as PNB housing finance are willing to do at 40K per yard. Is there a catch?

      Any guidance will be a big help?

      Comment

      • #4

        #4

        Re : Tax Treatment & Registry

        Mr Gupta - Based on my understanding -

        1) The Registry will happen at 40k or current prevailing Circle rates, whichever is higher. If the possession of plot was not offered then the registry would have been done at 20k.

        2) The capital gain for you would be ofcourse on 60k-40k for sure, no questions on that.

        3) There is no catch between SBI & PNB that ways. Its just individual underwriting guidelines which vary by bank. Ideally it should be a function of 40k and not 20k, since the Market price is likely to be > 40K for sure.

        Wish you all the best!

        Comment

        • #5

          #5

          Re : Tax Treatment & Registry

          Originally posted by manoj2066 View Post
          Mr Gutpa,

          1) Make sure you keep the ATS for the transaction which shows that you bought the plot at 40k psy. Using this the capital gain would be calculated from 40k to 60k. The capital gain from 20k to 40k would be paid by the existing seller. It is his liability not yours. You bought the plot at 40k.

          2) Secondly the registry should happen at 40k. Most builders have a clause in their transfer agreement that you are willing to pay the increase in registration charges due to your increased BSP. Double check your builder's transfer agreement for the same. If this clause is there, you will have to submit a copy of Agreement To Sale to the builder which will show you bought the plot at 40k psy, I dont think there is anyway you can pay registration at old rate.
          You will have to pay the registration at 40k. Double check your builder's transfer agreement.

          Thanks
          Manoj sir - thank u

          the builder is dlf, do you have any idea of transfer agreement of dlf

          Comment

          • #6

            #6

            Re : Tax Treatment & Registry

            Mr Gupta,

            I havent done any deal with dlf however your broker would certainly have a copy of transfer set for DLF. The brokers usually have transfer set agreement copies for all major builders they deal with. Please request a copy of the transfer set from him and read it thoroughly. It doesn't cost anything, he just has to fwd the word documents to you.

            Thanks




            Originally posted by nc_gupta View Post
            Manoj sir - thank u

            the builder is dlf, do you have any idea of transfer agreement of dlf

            Comment

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