Author Archives: admin

NRI tax rate and TDS deduction on sale of property

NRIs are taxed at the same rate as non NRIs. If property is owned for more than two years, then they fall under the 20% tax slab. If it’s a short term sale (owned for less than 2 years) then NRIs are taxed at the applicable tax rate based on total income taxable in India.

NRIs should also be aware of TDS on sale of property. There’s a 22.8% TDS that the buyer has to deduct for a property owned for more than 2 years. For ownership of less than 2 years, buyer has to deduct TDS of 30%. This TDS can be reduced through a special request to the Income tax department.

NRIs can remit upto $1 million on sale of property

After a sale of property and payment of appropriate taxes either through TDS during sale or advance payment of taxes, NRIs can remit up to $1 million USD.
NRIs have to produce documentary evidence of sale (sale deed, registration fees receipts, tax payment evidence) along with a certificate from an auditor to remit the amount back to their country of residence.
Any amount over $1 million requires special permission from RBI.

NRIs and Taxes

NRIs, your rental income for properties in India is subject to tax in India. While filing taxes you can take a standard 30% deduction on annual value of property, which includes the cost of maintaining the house. Other deductions are home loan interest paid, property and water taxes. Regarding filing of taxes, you don’t need to file until your income exceeds 2 lakhs annually.

Your interest from NRE account, dividend income and interest income from PPF is TAX EXEMPT.

For details on other taxes, check out this NRI Taxes link on Mint (a WSJ partner).

Landlords, your PAN number is required

Whether you are an NRI or not, your PAN needs to be furnished if you fit the following criteria…

1. If your tenant is using HRA (House Rent Allowance) from his company AND
2. If your rent is more than 1 lakh per year

When a tenant claiming HRA rents a house, their company furnishes a form which asks for landlord’s name, contact, PAN number and other pertinent details. If the landlord does not have a PAN, they ask you to declare as such.

For the complete article, check out the Mint (A WSJ partner) article

New home inspections – identifying snags and rectifying them

With too many constructions going on, several builders are in a hurry to hand them over to owners. Many of these hand overs is in an incomplete state and/or poor quality and builders expect owners to identify snags (issues) to be addressed. This is actually the last chance for owners to identify these issues and report, so it can be rectified before making final payment.

How is a new home owner, who may not have much knowledge in home building, supposed to identify all the snags? This is when we started offering the ‘New home inspection’ service performed by a highly-qualified Engineer. At first we approached this cookie-cutter style- we had a template with a list of common issues. We would walk through new homes with this check list to check them off. But as we inspected more and more homes, we realized that there is no common set of issues, every house has a unique set of problems because of various factors- builder, materials used, layout, etc. This led us to approach each house in a customized fashion. Go in with a blank mind (and a blank sheet of paper(s)) without any expectations and start marking down issues.

Some of the major issues we have found are Water seapage, poorly laid sunken toilets, hollow tiles, No rain water harvesting, Weak sunshades, Kitchen counter being too high, Missing skirting tiles, etc. Many of these if left unrectified will start deteriorating the building.

new home inspection report

New Home Inspection Report

You would be surprised to know that even with big name builders our issues list has run few pages long. Hopefully, builders take note of these issues and do a better job before handing over houses, but until then our Engineers will not let them off the hook.

Good luck with your new home! Get in touch with us if you want your home inspected.

How to save on taxes on rental income

There are 3 ways to reduce your tax liability on rental income from your property.

Tax on rental income

  1. Property tax deduction. Property tax you pay in that year can be deducted from your rental income before paying taxes on it.
  2. Maintenance, Insurance, etc. Regardless of how much you spend on repairs or insurance, you can deduct a flat 30% of the rental income.
  3. Mortgage interest deduction. If you have a loan on the house, the interest paid can be deducted, but the max. deduction is restricted to 1.5 Lakhs.

Be sure to account for these before paying your taxes. Here’s the official Govt. of India site for further details.

Vandalur to get new bus terminus

Koyambedu bus terminus is getting too congested… more buses than what can be parked and general traffic congestion is causing a lot of traffic woes. CMDA’s announcement of a new and larger bus terminus at Vandalur is great news. A bit late, but better late than never. It sticks to our tradition of waiting till a problem happens and then solving it. Just as how we build flyovers at traffic junctions way after they become highly congested. In any case, this is a much needed progress.

This project should also see Vandalur properties appreciate a bit as infrastructure projects are main drivers for property appreciation in India.

How NRIs can sell inherited property in India?

This week, Live Mint (a WSJ partner in India) had an article detailing the nuances with selling property inherited by NRIs.

For the complete article, see link at the end of this post. In short, here’s what needs to be done…

  • Transfer title to your name using a will or succession certificate
  • Collect recent sale deed and parent docs
  • If the house is in a community, get a Co-op certificate, No objection certificate and Occupation certificate

Rest is the regular sales process of hiring an agent and finding buyers.

Read the entire article at Mint How NRIs can sell inherited property in India?

Office space for rent at a prime location in Alwarpet, Chennai

This is the address to be in Alwarpet, Chennai. The office space spans 1100 Sq. Ft. and is located very near Univercell on Manickam road, 50mtrs from TTK road.

Alwarpet Office Space for rent

Call 9962612255 for a visit

Jan 2013 Update: Chennai property prices increase in the last 6 months

Just when everyone is predicting that property price in Chennai would plateau due to the global economic slowdown, Chennai ignores predictions and shows increase in price.

Chennai property price increases

Apartment prices in almost every part of chennai is going up. Here are some of the comps…

June 2012: Rs. 12.5k per Square foot (SF)
Jan 2013: 15k per SF

June 2012: 4.8k per SF
Jan 2013: 5.3k per SF

June 2012: 4.3k per SF
Jan 2013: 4.7k per SF

We do see a slowdown is sales volume for the past year or so, but the price only keeps going up.