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Wednesday, August 30, 2017

Tips for first time home buyers

Looking for your first house can be an overwhelming experience. It is one of the biggest financial commitments of your life and you want to ensure you’re not making a mistake at every step. However, the information overload can sometimes leave you lost and confused. From finding the ideal location, square footage required to getting a loan, the process seems never-ending. With these tips in mind, your home buying process could become a bit smoother.

Before the purchase

Location vs space 
While beginning to look for a house, it is important to consider your budget limitations and the kind of space you require. For example, if you have a large family or are planning any future changes like the birth of a child, elders moving in, etc. you might need a larger house, in which case a  house in the outskirts or suburbs will suit your budget more. You also need to consider other factors like distance from workplace, school etc. while making a decision on the location of the house.

Credit rating
It is extremely disheartening to spot your perfect home, only to realize that you don’t have the required credit rating to qualify for the purchase. Check your credit rating beforehand to know how much loan you qualify for, so you can make a decision accordingly.

Other costs involved
Buying the house is only the beginning. The cost of maintaining that house and paying off your loan is something many people do not account for. Be realistic about what you can afford and make a choice about the house accordingly.

Help you can trust
A good real estate agent can really be of great help in the home buying process. However, it is important to find a trustworthy agent who will not bail out on you if things go wrong and who will give you the right kind of advice. Fix on one based on recommendations from friends and family.

The buying process
Once you’ve decided to take the plunge and begin the house hunting process, you need to sort out a few things:

Shop for financing options
Speak to different banks and financing institutions and find out the most suitable option for you.

Making an offer
Discuss your final offer for any particular house with your agent who will in turn present the offer to the seller’s agent. The seller could either choose to accept your offer or make a counter-offer.

Professional inspection
You may think the house you chose is flawless and perfect, but it is always recommended to get a professional to inspect the house, just to make sure there are no major issues that may have slipped your eye.

Tuesday, August 15, 2017

How does GST affect the real estate market?

This year has seen some major reforms, starting from demonetization to the recent GST implementation. Of these, the real estate market is likely to be most impacted by the Real Estate Regulatory Authority (RERA) Bill and the Goods and Services Tax (GST). GST, in fact, is one of the biggest tax reforms in post-independence India. By implementing a uniform taxation system, GST replaces all the previously existing indirect taxes, including VAT, service tax and excise.
The implementation of RERA has already seen a lot of positive effects in the real estate sector, increasing transparency and accountability. GST will further be a boost for property buyers because of the simplified tax structure and increased accountability at every stage. It will, however, not bring down real estate prices in the short-term.

For the buyers
  • A simple and transparent tax of 12% applied on the purchase price (excluding stamp duty and registration charges) and no GST charges on completed and ready-to-move-in projects. The previous tax system of VAT system varied from one state to the other, causing a lot of confusion, ultimately leaving the buyers at sea.
  • Real estate product cost consists typically of material cost, land cost and labor or service costs. VAT is calculated on material cost and service tax is calculated on labor cost. However, it is very difficult for buyers to ascertain which taxes were calculated for which component. With GST, there is no more confusion.
  • Housing projects which come under the affordable housing scheme will not have GST.

For the developers:
  • In the previous tax system, developers had to deal with multiple taxes including customs duty, central sales tax, excise duty, entry tax, etc. Now the entire taxation burden is borne by the home buyer.
  • Major construction materials have not seen much of a difference in the tax rate
  • Cement will be taxed higher, at 28%, compared to the previous rate of 20-24%
  • Iron rods and pillars will be charged at 18%, in and around the former average of 20%
  • Transportation and logistics costs will reduce in the GST taxation system

Although GST is not going to show any major changes in the real estate sector in the short-term, buyer sentiment is bound to improve and overall, it makes life simpler for everyone involved in the real estate sector.