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V Nagarajan: Norms for capital gains exemption to buy residential property in India
June 25, 2017
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I am in the process of selling my existing residential property to invest in a bigger unit. I have already identified the new unit for investment. Can I invest even before selling the existing unit as the sale process is slow due to current market situation.  Would capital gains exemption be available?  Kindly clarify.  Nirmal Khanna, Dubai.

Section 54 of the Income-tax Act provides that if you want to make invest in buying a residential property, you need not invest your entire capital gains.  You can do the investment even one year before the date of the sale of the existing unit.  You can also make investment with your existing funds. If such an investment is made in anticipation of the proposed sale, the benefit of exemption in respect of long-term capital gains would be applicable on the sale of your residential property.

Will the new RERA rules cover existing projects in Chennai?  As the housing project has been delayed beyond four years now, will there be a solution to our problem of prolonged delay in getting possession of the apartment? Mohan Raj, Sharjah

The Tamil Nadu government has just notified the draft rules for RERA.  The state cabinet had given the go-ahead to ratify the rules last week.  As per the draft rules, developers failing to deliver housing projects on time could face jail term.  The rules will cover both ongoing and new projects in the state.

Our ancestral property has been sold by one of the co-owners without the knowledge of others.  How do we retrieve our legal share in the property now?  Bhandari, Ajman.

One of the co-owners cannot arbitrarily take any decision unless he has been given power of attorney and authorised by all the co-owners.  However, he can sell his undivided share of the property but not the entire property on his own discretion.  You will have to file a suit for partition of the property in order to get your share of the ancestral property. 

Notes:

Home Loans

Following the RBI’s move to reduce the risk weightage on home loans above Rs 75 lakh to 50% from 75% earlier, the home loan market is poised for an upswing.  The move is likely to encourage banks to lend more for housing and also make high value home loans cheaper.

Retailing Pace

The retail story in India has unfolded slowly over the decades. But today the pace of change has accelerated to such an extent that retail outlets need to constantly innovate and create to remain relevant to consumers, according to a joint survey by JLL and CII.

Increased PE interest was witnessed with the easing of FDI norms for single-brand retailers and an updated framework for REITs.

Organised retail trend started in India in the year 1999. Until the end of 2002, only three shopping malls existed in India. Post 2003, malls proliferated in the metro cities. The year 2007-08 saw huge growth rate in mall space coming up all over the country. India was hit by recession in 2008 which impacted the retail sector as well. Mall culture witnessed a slowdown. The vacancy levels in operational malls in Chennai are 2% for superior grade, 23% for average grade and 41% for poor grade.

With the advent of e-commerce in 2014, malls felt threatened and strategies to attract consumers became more creative. Today the pace of change has accelerated to such an extent that malls, hypermarkets and supermarkets need to constantly innovate in order to remain relevant.

Investment Hotspots

Six Indian cities have found their places in the top 10 emerging property investment destination list in Asia Pacific. The Indian cities are Hyderabad, Pune, Mumbai, New Delhi and Chennai.  Most of the global investments for this year will be made in commercial office assets as markets in Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune are well placed to outperform other cities from emerging economies in Asia Pacific, according to a report titled ‘Betting on Asia Pacific’s Next Core Cities’, by Cushman & Wakefield.

The developments had resulted in net absorption across the top eight Indian cities to remain in the range of 32-35 million sqft in the past three years even as the share of the IT_BPM sector in commercial office leasing has steadily gone down from 65-70 per cent to 52-55 per cent during this period.



THE AUTHOR IS A BUSINESS ANALYST COVERING INDIAN PROPERTY MARKET

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