PM's VISION, FOR A HONEST CORRUPTION FREE BHARATHAM -
11/11/2016.
848.
All Members,
Respected family members of this great holy Nation.
Sub : Only in black : This example shows all that is wrong with Bharatiya real estate
Ref : PM's VISION, FOR A HONEST CORRUPTION FREE BHARATHAM
1. I was one of the listeners in group of friends, and had to listen an interesting conversation between two persons, A and B.
2. One of them, A had bought a flat in his state sometime back at a price of around Rs 25 lakh. The area was totally undeveloped at that point of time and hence property was going cheap.
3. More than a decade later the flat is now worth around Rs 2 crore. The flat had been bought as an investment. This person A, planned to sell the flat and use the money to meet the expenses of his daughter's education (she wants to do an MBA/PhD from a good university in the United States) as well as her wedding.
4. The balance that remained after meeting his daughter's expenses would go into his retirement fund, given that he has no plans of working beyond the age of 63-64.
5. During the course of their conversation his friend B suggested to him that it would be a good idea to sell the flat and invest the money into different debt mutual funds. The logic being that Rs 2 crore was more than enough to meet his daughter's education and wedding expenses and at the same time add to his retirement kitty.
6. So it made sense to preserve the Rs 2 crore that he had managed to accumulate by investing in the flat, rather than look for more gain. Also, by investing in debt funds, the return that he would earn would be similar to a fixed deposit but the after tax returns would much better given that he could take indexation into account while calculating his taxes. Indexation essentially allows the cost of purchase of a flat to be adjusted for inflation.
7. The after tax returns would be in the range of 7-8% and he could make a decent Rs 14-16 lakh every year, which would further compound, if he stayed invested.
8. He A, liked the idea and decided to sell his flat. Given that the flat was in a good society, he got several good offers. But even one month later he has not been able to sell the flat. He A, called his friend B, few days back and told him that he had not been able to implement the plan as friend B, had suggested to him, around a month back. The reason for that was very simple. Although he A, had got offers from several buyers willing to buy the flat at Rs 2 crore, none of them were willing to pay him the entire amount in white, through a cheque. The buyers typically were ready to pay around Rs 80 lakh in cheque and the remaining Rs 1.2 crore in cash.
9. As mentioned earlier this person A, had bought the flat at Rs 25 lakh, most of which was financed through a home loan. The remaining came from the savings he and his wife had put together. So all the money to buy the flat had been paid in 'white'. He had been lucky given that the builder he had bought the flat from was building his first project and was more interested in offloading what he had built, rather than insist on being paid in black.
10. The property dealers, A had been dealing with to sell the flat had clearly told him that if he wanted the entire Rs 2 crore to be paid in cheque, then he could more or less forget about selling the flat. At best, they could get a buyer who would pay upto Rs 1 crore in cheque, the remaining Rs 1 crore would be paid in cash. For someone who has largely lead an honest life, he couldn't figure out how he would go around handling cash to the tune of Rs 1 crore. The brokers had a solution for this as well. They could help him buy gold bars. Or if he was willing to bet his money on real estate again, they could showcase some projects coming up on the outskirts of the state or in his home town. Maybe he could buy two flats there, they suggested. And if he found all this too risky, he could simply store away the money in a couple of bank lockers. Even that could be arranged for, it was suggested.
11. The person A 's situation is a very good example of all that is wrong with the Indian estate real system as it has evolved. Since a major part of the transaction is in black, the cash that is thus generated needs to be put to use in some way. Just putting it away in a locker is not really a solution.
12. Money needs to keep growing. The amount paid in black can also be used to buy more real estate. For a flat which costs Rs 80 lakh, half the money i.e. Rs 40 lakh, needs to be paid through a cheque, and the remaining Rs 40 lakh can be paid in cash, brokers suggested to A. This also means that Rs 40 lakh of the Rs 1 crore that A had received in white would be put to use and become tax free. The law gives a tax payers two years from the date of the sale to invest in another 'residential' property. If the property is under construction, a period of three years is allowed. The amount invested becomes tax free.
13. As mentioned earlier Rs 40 lakh of the Rs 1 crore received in black, would be utilised to buy a flat. That means Rs 60 lakh would still remain. This can be used to buy gold. Gold can be easily stored and hidden.
14. My views
1. Most Registration offices in Bharatham, are corrupt, from Registrar, all concerned clerks, Document writers, to all sundries in the office, AND THE STATE OFFICIALS ALSO INVOLVED, ON ONE PROPERTY IS SOLD TO SEVERAL PERSONS, BY FRAUD DOCUMENTS;
2. For all transactions, Payments in the office, from document writer onwards to all fees is allowed by Cheque only, AND ATTORNEY VERIFICATION AND CERTIFICATE NECESSARY TO VERIFY PROPERTY ;
3. The cost of property sold, payments through cheque only,
4. PHOTOS BUYER AND SELLER, AADHAR AND PAN NUMBER SHOULD BE ADDED IN ALL TRANSACTIONS,
5. This rule is applied to the purchase of gold from jewellery also,
6. Bank locker should not be allowed to store gold beyond certain limits,
7. That too proper records, receipts, and proof of transaction etc along with the financial status of the person,
8. Cash that is black money should not be allowed to store in bank lockers,
9. Jewellers do not give proper receipt for the sale, majority jewellers are corrupt, VIGILANCE NEEDED HERE;
10. Hawala trade should be stopped. And chain reinvestment in real estates should be stopped.
Thank you for reading
JAIHIND.
To be continued......
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