Govts move to remove property indexation will make real estate speculative
Real Estate speculating will pick up in India after this ill thought oversmart decision of Government. Here is why:-
[1] Indian government charges a stamp duty of around 9% on high ticket properties.
[2] Unfortunately, once you pay this duty, crores of money gets locked for decades in Real Estate.
[3] How does the government make that 9% again? Well by making you sell/buy (i.e flip). Every time you flip, someone pays another 9% of the entire value
[4] So far: with indexation benefits people had the incentive to stay invested in the Real Estate for long-term
[5] Why? because if the inflation (price increase) rose fast. The indexation (or inflation offsetting) benefits would be given to the final property value.
This was a hedge against rising inflation.
[6] Now, this incentive has been withdrawn.
[7] The Real Estate game in town would be: buy a property. Sell it as soon as the long-term capital gains kicks in after 2 years.
[8] This encourages:
a. Trading of properties on new properties
b. Black money transactions on old properties
c. Builders making more money
[9] How exactly? will builders make more money: the way project launches are designed. Easy payment plans, massive marketing, creation of hype -- will lead to a lot of "traders" moving into the Real Estate market.
[10] Real Estate brokers, government, builders will be the ultimate beneficiary.
[11] People who choose to buy a home, which they might sell in case of an emergency after 20 years, will be hit the most. more
[1] Indian government charges a stamp duty of around 9% on high ticket properties.
[2] Unfortunately, once you pay this duty, crores of money gets locked for decades in Real Estate.
[3] How does the government make that 9% again? Well by making you sell/buy (i.e flip). Every time you flip, someone pays another 9% of the entire value
[4] So far: with indexation benefits people had the incentive to stay invested in the Real Estate for long-term
[5] Why? because if the inflation (price increase) rose fast. The indexation (or inflation offsetting) benefits would be given to the final property value.
This was a hedge against rising inflation.
[6] Now, this incentive has been withdrawn.
[7] The Real Estate game in town would be: buy a property. Sell it as soon as the long-term capital gains kicks in after 2 years.
[8] This encourages:
a. Trading of properties on new properties
b. Black money transactions on old properties
c. Builders making more money
[9] How exactly? will builders make more money: the way project launches are designed. Easy payment plans, massive marketing, creation of hype -- will lead to a lot of "traders" moving into the Real Estate market.
[10] Real Estate brokers, government, builders will be the ultimate beneficiary.
[11] People who choose to buy a home, which they might sell in case of an emergency after 20 years, will be hit the most. more
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bjp govt is sucking blood od middle class.election 2027 bjp will have sit in opposition with less than 100 seat, all prices from medicin to food products . bjp is silent. increased but congress is also no better choice to vote more
1 h ago
The loss of indexation benefit will only hurt INVESTORS in real estate, not those who rent or buy for own use. more
3 h ago
Agree in general with the comment. But genuine buyers buying to reside do not have any issue. Only those who invest and sell to make money get taxes. If one wants to make profit, TAX PAYING IS A MUST. more
4 h ago
