Buying a Plot of Land for Capital Apreciation In India
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Posted on: 15-01-08 10:36:03
Many Thanks to all who responded to my doubts . After one month of intense searching and analyzing I brought 500 sq yards plot in NCR of Delhi (Gr Noida)
My analysis led me to the following understanding :
WRT appreciation land is always better than apartment as for aprtment price to increase all the apartments' price shouuld increase . Land being relatively less increases more . Buy land for investment and appreciation , buy an apartment when you wish to live .
Investing in an under saturated market will bring more ROI v/s the saturated / near saturation market . Its a pattern of growth land follows . Where occupancy may be less , land prices will be lower as compared to saturated places . Eventally over a period of time (esp in India ) whats under developed now will become saturated in long run and then is the time to dis invest.
Newer colonies /areas are better designed and offer more potential of growth viz Gurgaon / Gr Noida / Dwarka .
If possible , be the first allottee either through a builder or relevant authority - you save on registratition and have least risks to the title . I brought mine from Ansals .
All the best to others who wish to go on this route .
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Fido.
What are the tax implications when the property is eventually sold for capital gains?
Will it be taxed at the full marginal tax rate?
Also, what are the options for repatriating the money to Canada?
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Capital gains is 20 % adjusted to the difference in circle rates . Repartration is a gray area for me also although I feel that as long as we have apaid taxes , the money should be repartriable .
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Fido.
Quote:
Originally posted by Fido
WRT appreciation land is always better than apartment as for aprtment price to increase all the apartments' price shouuld increase . Land being relatively less increases more . .
Land will always appreciate in value faster then the apartments. Infact when DLF were selling land in Gurgaon in late 1990's, they also realized this. That is why then sold land in DLF Phase 1 to 3 but their Phase 4 was converted to high rise apartments. They realized they could get better returns on their investment by value addition to land. They had infact laid out roads and some basic infrastructure for Phase4 to be sold as plots. But then they ripped the whole thing apart and started building flats.
On repatriation check http://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=2321#3
The only drawback is that someone can illegally encroach on vacant land, a reality very much in India.
My 0.02 cents:
If you have plan to use that land in future (for yourself or your close relative) or do not want to bring money back then it is different story for investment.
If you are jus investing for ROI then consider exchange rate when you want to bring money back. It may eat large chunk of your ROI. Again every deal is different on base of location and deal you are getting.
I have personal experience property price doubled in India but 50% profit gone in exchange rate when I brought my money back. I sent money at 1CAD = 40 Rs to buy plot and I paid 58 Rs = 1 CAD to bring back. In parallel, I invested in residential real estate in Canada and noticed ROI in Canada much higher and less worry and dependency of monitoring properties in compare of India.
Thanks
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