SAFE PROPERTY REAL ESTATE TIPS FOR PROPERTY INVESTORS

Nearly 25 years ago, Mr Russ Morison, a leading real estate agent in the US, wrote an article in the Readers Digest saying that when looking for a house, you are seeking happiness, success, security, respect, beauty, comfort – intangibles and individual as the shape of your nose. Same is true even today, hence investing in real estate is the desire of one and all particularly for the investment in one’s own sweet house. For profitable investment in real estate please remember that before making investment in real estate pause for a moment and see the size of the family, the age of different family members, today’s income-tax and wealth tax position and finally watch the impact of investment in real estate as far as income-tax and wealth tax is concerned on different family members and then decide where to invest and in whose name. Property can be jointly purchased in the names of two or more family members. For joint purchase of property the investment by the co-owners should be in proportion with their ownership in the property. For example, if the property is proposed to be purchYour wife can take loan from you for construction of the property with reasonable rate of interest. However, she should not receive a gift from the husband as well as the father-in-law and the mother-in-law so as to avoid the clubbing of rental income in their hands. If investment is made in real estate through a trust for the minor child which contains a clause that no income or capital from the trust fund will be distributed or utilized for the benefit of the minor child during minority then the income of such minor trust investing in real estate and deriving rental income therefrom will not be added with the income of the parents. This view has the approval of the Supreme Court. Taking loan for investing in real estate is very good specially for self-occupied house property, if property is purchased after 1st April, 1999 with loan then the yearly interest which is allowed as a deduction in respect of house property is Rs. 1,50,000 per annum per person. ased in the name of husband and wife in the ratio of 50:50, then the investment should also be in the ratio of 50:50.
If the employee is in service then the employer can grant the benefit of interest deduction from house property provided the employee submits details. Clear cut demarcation of the property must be made if it is a joint property between two or more family members so as to avoid any future disputes and tax litigation. If the employee is in receipt of house rent allowance he can enjoy tax benefit out of his house rent allowance payment received by him if he were to make payment on account of rent to his wife or any other member of the family. Invest in real estate in the names of those family members whose income and wealth as on today is on the lower side. It is advisable from the point of view of tax planning that each person owns just one residential house property only, because one residential house property is completely exempt from wealth tax without any limit. Hence, if you are contemplating to buy one more residential house property in the family it is advisable to buy the same in the names of those family members who are not owning any property. Commercial property is completely exempt from wealth tax. Hence, if you are owning commercial properties in large numbers you don’t have any problem specially from Wealth Tax. If a person is possessing more that one residential house property but the same is let out for more than 300 days in a year the same is completely exempt from Wealth Tax. Hence, if you are buying in one name more than one property with the aim of letting it out then the Wealth Tax law will not cause a problem to you. By adopting the concept of sale of roof rights in existing buildings owned by you, you can save income-tax in years to come. You can sell the roof right even to your wife at the prevailing market value so that in years to come if you wife or other family member who has purchased the roof rights from you can construct on the said roof and if she gives it on rent or sells it out the income therefrom will be treated of such person who purchased a roof right. From the point of investment planning it is not worthwhile to own farm house in the name of a person who is already owning one residential property in his name. Like wise avoid making investments in many vacant lands as the same would attract wealth Tax. Tax deduction under section 80C is permissible @ 100% upto Rs. 1 lakh for part payment of installment etc., of the real estate. While making investment for a farm house by purchasing agricultural land the first step in the right direction would be to enquire from the office of District Town Planner about the legal status of the agricultural land on which farm house is proposed to be constructed. In many areas there are restrictions on construction of farm house on agricultural land whereby if a farm house is constructed it may amount to illegal construction with problems of demolitions. Hence in all cases a reference to the DTP should be made before investing in farm house agricultural land. For making real estate investment do not make investment in already mushrooming areas or in areas where the price of real estate is already pretty very high. Reversely make the investment in such areas which are in development stage right now.More on....... http://debt-refinance-realestate-mortgage.blogspot.com/