How GST Impact on Real Estate?

Under GST, the treatment of rent is very clear. Landlords who are earning rental income by giving their properties for residential use will not be taxed under GST - thus there will be no GST on rent for houses. However, the GST rate on commercial property rent will be 18%, and it will be levied only by those who are earning more than Rs 20 lakh annually. If the landlord is unregistered due to the threshold limit, the taxable person has to pay GST on rent under reverse charge - at standard GST rate on commercial rent.

Goods and Service Tax impact on home loans

GST impact on the loan taker

Before evaluating the potential impact of GST on home loan EMI and costs, let us understand the components that are bound to be affected under GST. The main cost of taking a home loan is the interest payment on the principal amount. Similarly, any stamp duty levied in respect of documentation of home loan will also not change with GST, as stamp duty is not levied under GST.

GST impact on lender

Lender - In other words, banks and financial institutions that extend loans for real estate will receive ITC in relation to the services received. Also, purchased goods, which they can use against their GST output tax liability, which is good news.

Reduction in black money in the era of GST

GST will help cut down on the cash component in construction, as input will now have to be obtained from registered vendors to get the input tax credit. This would go a long way to reduce the black money component in real estate. In addition, the GST return process will ensure that both the supplier and the recipient of the goods and / or services are liable to disclose transaction details. Price, amount, GST rate etc.

FDI increase under GST

Investments coming from foreign shores are likely to have a positive GST effect - benefiting the NRI community, mainly due to a seamless-inclusive channel. Simplification of taxation is possibly the most positive GST effect on investment, which will also increase the confidence of the NRI market to invest in Indian real estate.

GST applicability on FSI / TDR

Floor Space Index (FSI) / Transfer of Development Rights (TDR) - Used by developers, are rights in land. As per GST law, not all immovable properties are excluded from the purview of GST, such as sale of land. There is a lack of clarity on whether FSI / TDR sales are to be considered "part of the land" - if they are, they too will stand out from the GST; If not, GST will be applicable.

GST on intellectual property rights

The GST law provides for the taxing of the supply of goods or services, or between both the concerned persons or different persons, without consideration. Typically in the real estate sector, multiple entities in the same group use single logos / trademarks without consideration, which can take advantage of GST, while no tax was previously applicable.

GST on barter Transactions

Many barter transactions are seen in the real estate industry. For example, giving free flats in exchange for 'development rights'. In the previous regime, barter transactions were mostly exempted from VAT, as a 'price' was not included. However, under GST law, all types of supplies such as barter, exchange, and so on, and the value of supplies will be taxed according to GST rules.

Buying a Commercial Property That Guarantee Success and Prosperity

The real estate market in India has grown by leaps and bounds since the implementation of RERA, Smart City Mission and Start-up India Mission. These schemes created high demand for commercial establishments. As the Indian population is growing rapidly, the demand for commercial real estate will never decrease. Therefore, investing in commercial properties can help you achieve a higher return on investment. Okay, investing in a commercial real estate can be a bit scary because you need to invest more money. But with a few simple tips in mind, you can invest in a property that will help you emerge successfully.

1. Research the market

Before investing in real estate, you need to pay attention to market trends. Also find out what kind of qualities are in high demand. Before deciding on what to buy, you need to analyze the scope of future development in the regions.

Buying a property in a developing area is much better than buying a property in a well-established location. The former choice is cheaper and it gives you a higher return on investment.

2. Consult a financial expert

When you have no prior experience in this area, it can be difficult to estimate the exact cost of purchasing a commercial actual. Therefore, before purchasing a property, you should consult a financial advisor and plan your budget accordingly. Tax implications can be complex to analyze in a real estate transaction.

3. Analyze your financial situation

Before investing in a commercial establishment, you should analyze your financial situation. Make sure you will be comfortable paying its EMI, even if there is no rental income from the property. Also, before purchasing a property, you should analyze the scope of income from it. In addition, you should also calculate the risks involved in the entire business.

4. Plan your layout well

Whether you are building an office space, shop, mall, or simply renovating it, the layout has a big impact on operational efficiency. This will directly affect your scope of making money by rent or reseller. Therefore, you should prepare a smart plan to refurbish or design the property. Seek the help of an architect if needed.

5. Choose the right builder

You should always buy a commercial property from a reputable builder. Therefore, does a background check of the builder and take a review from those who have purchased the property from the builder. Also, make sure the builder is specialized in the field. The history of a builder should also be considered in the context of the completion of the project.

During Financial Crisis How To Manage EMI Payments?

Unlike our ancestors, who worked hard for years to buy their home are open to the idea of ​​purchasing their property for home loans. There is no doubt about taking home loans due to government policies. But at the same time, motivating oneself has made the youth tense and fearful about the unexpected future. Out of all the loans a person takes for a lifetime, the home loan is the most difficult to repay. A normal home loan is taken for a period of 5 to 30 years. EMIs are easier to manage when a home receives some rental income, but this is not the case with self-used property.

Well, we have never seen the future. But at least we can be ready to face it. In this writing, we have shared some great tips to help you manage the payment of EMI during financial stress.

1) Don't Overload Yourself - If you have invested in multiple properties, and repaying a home loan is a difficult task that makes you feel stressed, and then take action on time. Instead of living a stressful life, you should consider getting rid of the burden. These days, you can easily sell a property, even if it is under debt obligation. Alternatively, you can rent it to a suitable tenant or real estate company. By renting property or renting it to a person or business organization for a long period, you can earn a regular income that can be used to pay off debt.

2) Speak to the bank at the right time - Whenever you feel inability to repay a home loan, do not hide the truth from the bank by avoiding its message or call. Rather, you should be transparent about your position to the bank. In general, banks try to support their customers in adverse circumstances.

3) Maintain a contingency fund- To face the effects of adversity such as job loss or economic downturn; you should maintain expenses for about 6 months as a contingency fund. Due to low interest rates in savings accounts, you can keep this money in fixed deposits.

4) Get insurance - Does not come with a life guarantee card. In certain situations such as job loss, economic downturn or death, loan installments may not be paid on time. Failure to pay a home loan can lead to a situation when the house or its collateral will be confiscated. To prevent such situations in unexpected future, you should get home loan insurance.

5) Make quick payments - In some situations, it can be difficult to repay the EMI of a home loan. But reducing EMI payments every month will increase the outstanding principal amount. If possible, try to make a quick repayment of the principal amount as it will reduce the financial burden. Remember that repaying home loan should be your priority over other expenses.

How to safe your home during monsoon...?

The monsoon season is a time for home owners to make some changes in their homes, avoiding small / big losses. India is predicted to receive normal monsoon rains in 2020. However, as we cheer for the arrival of the monsoon, exposure to water and moisture should not show any laxity to protect our homes as it can be harmful. This is especially true for areas where heavy rains are likely.

 

1. Water proof exterior

Let us first start with the exterior of our house, as this is the part that is directly exposed to the rain and this is where potential seepages enter the house. During the rainy season, moisture stored in the ground may rise. Eventually, moisture leaks out from the exterior of the house and causes moist patches on the interior walls. Apart from the fact that these patches are actually affecting the health of your home, they will spoil the smell of the house, cool, moist and invite fungus.

You should first check for any cracks or damage that may appear in the exterior walls and fix it immediately. Another effective way to prevent seepage is to use water-proof paint on exterior walls. Over time, you will need to re-paint the exterior. Owners of large open spaces should also ensure that there is no obstruction of the drains in case of recession and that the rain water can drain freely.

2. Water proof terrace

The roof is as much exposed to the elements of nature as the exterior walls and plays an equally important role in protecting your home. Since most of the houses in India have flat roofs, it is important to ensure that rain water drains easily. The first step towards waterproofing your roof / roof will be to ensure that it is clean and water does not accumulate anywhere when it rains. To keep the roof relatively clean, trees should be trimmed nearby.

Another way to prevent seepage is to apply multiple layers of elastomeric coating to the roof. In addition to protecting it against water, this coating will also insulate it, preventing heat loss from inside the building.

3.  Fixed drainage box system

A proper drainage system is important, to ensure that there is no waterlogging in any area of ​​the house. In addition to ensuring that there are no obstructions with the drainage system of the house, also ensure that storm water drains outside the house are not blocked by silt or debris. Generally, the civil authorities in your area should take care of this. If this has not happened, file a complaint and complete the work on a priority basis.

4. Check Electrical wire system of you house

The majority of lightning accidents occur during the rainy season. Consequently, homeowners should ensure that power cables do not come into contact with water. This is where earth leakage circuit breakers come into the picture, as it avoids electrocution and electric shock.

Fix all your faulty electrical sockets and equipment on time. Note that circuit breakers, fuses, socket outlets, plugs and switches may malfunction when exposed to water and moisture. Try not to fix them on your own. It is not advisable to operate electric appliances in the rain.

5. Protect you furniture from moisture

All wood items in the home react adversely to moisture and humidity, which are specific to the rainy season. In addition to making their precious articles of furniture lose their shape and form, these conditions also make them vulnerable to termites and pests.

To protect furniture from moisture and moisture:

· Apply a fresh coat of varnish / lacquer to protect the wood from swelling.

· Keep wooden furniture away from the wall.

· Buy a humidifier to keep temperature and humidity in check.

· Do not use wet cloth to clean the furniture.

How to maintain your home tips that can help you save heavily on repairs

Buying a house is a costly affair for which you have to spend years of savings and take huge amount of loan. Therefore, you always want to be there with your family. But the cost of living in your home can increase if you have to incur major costs on repairs. While many of the expenses on home repairs are inevitable, some expenses can be eliminated by maintaining the roof, foundation and other important parts of your structure. In this write-up, we have shared some simple tips that you can reduce significantly on home repair and maintenance.

1) Test your sump pump to avoid flood

Basements and foundations require regular maintenance to avoid major damage due to climate effects and natural disasters. To increase the longevity of the foundation, you must take precautions that are the last line of protection against flooding, condensation construction and draining water. You should consider testing the sump pump every 6 months.

2) Maintain Plumbing

If you want the water to flow easily through the bathroom, kitchen and sink, then you should maintain good hygiene at these places. Toilets and sinks should be used regularly; otherwise, frozen and solid layers of calcium carbonate can cause obstruction in pipes and taps. In addition, you must prevent fat, oil, dirt, and hair to enter the drainage pipe. In the case of accidental spills of oil or fat down the drain, consider flowing hot water down your drain with some dishwashing liquid. To prevent hair from going into the water drains, you should use a hair strainer for the bathtub.

Although acids are helpful in cleaning the clogs in the pipe, you should not overuse it as it can cause considerable damage to your plumbing, including premature leakage.

3) Keep rodents and termites away

Mice and termites can cause slow but heavy damage to your property. Mice can build their nests in AC, wardrobes, electric wiring systems, bookshelves and garden machinery. They can damage household goods, eat groceries, and cause extensive damage to property.

Similar to rodents, termites can pose considerable exposure to wooden furniture. Termites are more likely to grow in moist areas where sunlight does not reach properly. So take special care of such area. If possible, spray anti-termite solution once a year in wooden doors and furniture units.

4) Paint the house every few years

Painting the house once every few years not only give the property a new look, but also allows you to detect sealant areas and cracks in the wall. You should apply primer before applying paint. Additionally, if there is a moisture issue in the wall, look for a waterproofing solution. If odor at home is an issue, consider adding a few drops of vanilla to your paint.

5) Maintain your roof

Taking care of roofing issues, you should stay away from costly repairs. You should look for leaks and vents due to water damage. It is best to inspect the roof professionally at least once a year.

Is it wise to invest in the Indian real estate market in 2020-2021?

Finance Minister, Nirmala Sitharaman presented the Union Budget 2020-21 on 1 February. Highlights of the budget for the real estate sector are as follows:

Deductions on affordable housing were allowed on housing loans sanctioned on or before March 31, 2020. In order to ensure that more people take advantage of this benefit and to pursue affordable housing, the date of loan approval has been proposed to be extended by 1 year. To boost the supply of affordable homes in the country, a tax holiday is being provided on the profits earned by the developers of the affordable housing project till 31 March 2020.

Currently in real estate transactions, when taxing income from capital gains, business profits, and other sources, if the consideration value is less than the 5% circle rate, the difference is counted as income for both the buyer and seller. To reduce the difficulty in real estate transactions and provide relief to the sector, it has been proposed that the limit be increased from 5% to 10%.

An investment of Rs 100 crore will be made on infrastructure in the next 5 years in various sectors like housing, infrastructure, energy, healthcare, educational institutions, transport, logistics and warehousing, irrigation projects etc.

The year 2019 was a period of many highs and lows for the Indian real estate market. The ongoing crisis resulted in a decrease in liquidity and a slower pace of sales improvement. However, on the positive end, the successful launch of India's first real estate investment trust (REIT) opened up new avenues for investment, while several positive government initiatives provided much needed relief to the sector. 

According to research, the housing sale price of India's top 9 listed players reached in the 2nd and 3rd quarters of 2019, an increase of 5%. 2019 saw a 4–5% annual increase in housing sales with over 2.58 lakh homes sold during the year. The new housing launches in 2019 saw 18-20% annual growth and developers are expecting sustained efforts of the central government such as additional cuts on loan interest, GST rate cuts, alternative investment funds for stalled projects and credit guarantee scheme changes in the sector will be strengthened.