Announcement

Collapse
No announcement yet.

Builders & Real Estate Bulls Theory Proved Wrong

Collapse
X
Collapse

Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
12768 | Posts
  • Time
  • Show
Clear All
new posts

  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by sudhashbahu View Post
    Rationalizing RE prices is very simple provided there is political will to do it. I had proposed a number of measures here: http://www.indianrealestateforum.com...ate-76638.html

    Some tax laws are on purpose skewed to favour RE price rise. There is no logic to explain why struggling first time home buyers tax benefit is limited but second home buyers tax benefit is not limited.
    no limit tax deduction on interest part (u/s 24) is for any home which is not self occupied irrespective of it is first home or second home.

    There are many examples to explain concept in this tutorial - http://www.incometaxindia.gov.in/tut...e-property.pdf

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by Sj2013 View Post
      no limit tax deduction on interest part (u/s 24) is for any home which is not self occupied irrespective of it is first home or second home.

      There are many examples to explain concept in this tutorial - http://www.incometaxindia.gov.in/tut...e-property.pdf
      Yes, but first time home owners are more likely to self-occupy and investor are less likely to self-occupy. Therefore by the current rule investors are likely to benefit more than first time buyers.

      The objective is to switch rules to benefit first time buyers than investors.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by Sj2013 View Post
        no limit tax deduction on interest part (u/s 24) is for any home which is not self occupied irrespective of it is first home or second home.

        There are many examples to explain concept in this tutorial - http://www.incometaxindia.gov.in/tut...e-property.pdf
        Originally posted by sudhashbahu View Post
        Yes, but first time home owners are more likely to self-occupy and investor are less likely to self-occupy. Therefore by the current rule investors are likely to benefit more than first time buyers.

        The objective is to switch rules to benefit first time buyers than investors.
        Govt is giving tax benefits for you to become landlord and give flat at 2.5% yield.

        For those inclined to be landlords this is a good incentive.

        For those who cant afford to buy own home this measure gets them a cheap rental.

        Lets assume 1L income. Loan of 50L at EMI of 50000 pm with say 45000 as interest. Flat rented out at 10000 pm.

        35000 is the difference from salary. So at 30% tax saved you gain say 12000 pm. 10000 is rent. So 22000 saved.

        You still pay interest at about 22000 on 50L or say 5% interest. If your property appreciates at 5% per annum you BREAK EVEN.

        Whatever price rise is above 5% is your gain on losing 50% of your salary.

        It can even be 0.
        Venky (Please read watch a or before posting)

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          No such noble objectives Venky.

          If you are going to be charged on any income , the expenses incurred to earn the income should be deducted.

          This is the reason for allowing the 100% interest deduction even for a deemed let out flat .
          Last edited by Que Sera; November 6 2014, 08:48 PM.
          Life is what happens when you are making other plans. Enjoy it

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            If you are going to be charged on any income , the expenses incurred to earn the income should be deducted.
            Yes, this is the right reason. Same holds true for corporate debt.
            Dividends (another form of expense) are however taxed, thus motivating companies to prefer debt over equity. (and consequently risk in the economy).

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by Que Sera View Post
              No such noble objectives Venky.

              If you are going to be charged on any income , the expenses incurred to earn the income should be deducted.

              This is the reason for allowing the 100% interest deduction even for a deemed let out flat .
              Yes but govt could have put in rider of max deduction limit. Why it should lose tax?

              Without tax benefits only idiots will buy rental property at 2% yield. Even with tax benefits you are out 5% per annum if market stagnates like in 1996 to 2003.

              Unlimited deduction has been specifically said to be for public good of creating housing stock many times by FM and other experts.

              We are talking income from house property not business income. It is separate section of tax code

              Without it people will be unable to rent.

              Please remember 1980s when rent was 50 to 75% of salary. I remember 4000Rs salary and 2000 Rs rent paid by my parents
              Last edited by Venkytalks; November 6 2014, 09:49 PM.
              Venky (Please read watch a or before posting)

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by southsea View Post
                If you are going to be charged on any income , the expenses incurred to earn the income should be deducted.
                Yes, this is the right reason. Same holds true for corporate debt.
                Dividends (another form of expense) are however taxed, thus motivating companies to prefer debt over equity. (and consequently risk in the economy).
                Dividend = sharing of profit.

                The tax on dividend is a form of tds... makes it tax free in the hands of the shareholder. So while the incidence of tax remains on the shareholder, the payment responsibility is shifted to the company. Without the dividend tax, the shareholder would have received a higher amount but would have to pay tax on it.

                Actually a smart move.. Since one company pays for a million shareholders. Evasion is zero, costs of collection/enforcement are a fraction of what they would have been.
                Life is what happens when you are making other plans. Enjoy it

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Venky

                  Income tax = tax on income = revenue - expenses.

                  Remember this is business income, not your salary income with caps on insurance/pf etc..
                  Life is what happens when you are making other plans. Enjoy it

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Desi sleaze and dirty money: Foreign firms will stay away from realty despite new FDI norms

                    Originally posted by herohiralal View Post
                    "India's relaxed rules for foreign direct investment (FDI) in construction will make it easier for foreigners to invest in real estate. While the move has surely been cheered by the real estate sector, for it will bring in much needed capital for those steeped in debt, it could bring more pain for home buyers. Reason: more foreign money in realty means higher property prices. Simple demand-supply logic."


                    Foreign firms will stay away from realty despite new FDI norms


                    India permits 100 per cent Foreign Direct Investment (FDI) in the construction sector, yet the nation has so far received only passing interest from foreign realtors that is proven by the fact that FDI in the sector till August was just US $23.75 billion, just 10 percent of the total inflow compared to 2000.

                    A few days ago, the government had taken new measures to elicit foreign interest --- the minimum built up area in a project has been brought down to 20,000 square meters from the earlier 50,000 square meters and simultaneously the minimum capital infusion requirement has also been brought down to $5 million from $10 million for foreign construction firms.

                    The government obviously hasn’t diagnosed the problem correctly. The lukewarm interest shown by foreign construction firms has nothing to do with financial and technical minutiae, but has everything to do with the image of India’s realty sector as being steeped in corruption and sleaze. There is no guarantee that a foreign realty firm would not be heckled at every stage in the land acquisition process.


                    Against this backdrop it would be naďve to expect foreign constructions firms would come to India in droves and bring much needed capital.



                    Desi sleaze and dirty money: Foreign firms will stay away from realty despite new FDI norms - Firstbiz
                    If you are happy, you are successful.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Marked drop: 10-35% dip in home rents across Mumbai

                      There is good news in store for Mumbaiites who plan to rent homes in the near future — there has been a marked reduction in rentals of residential properties across the city.
                      While the rents for smaller homes have dipped by 10%, those of premium properties have fallen by 35%, experts from the housing sector said.

                      According to realtors in the city, factors such as a slowdown in the economy, a recession in real estate, cost-cutting by companies, as well as better bargaining by tenants have led to this fall in rents.


                      In addition, real estate investors, who are saddled with vacant flats because of low demand from buyers, have made these apartments available for tenants.

                      “The older rates were inflated. What we are seeing now is a correction in prices,” said Prakash Rohera, CEO, Kkarma Realtors. He said many companies too, which would earlier rent out apartments to employees liberally, seemed to have tightened their purse strings.

                      “A large number of flats belonging to investors are available in the market, because of which the customer has many options,” said Ketan Alvani, a leading realty broker. “Even while leases are being renewed, there is either a considerable amount of bargaining or no annual increase this year.”

                      Marked drop: 10-35% dip in home rents across Mumbai - Hindustan Times

                      ^^ Though news is of Mumbai, the situation here too is more or less the same.

                      If you are happy, you are successful.

                      Comment

                      Tags: None
                      Have any questions or thoughts about this?
                      Working...
                      X