I want to buy a house in Canada for my son who is studying there. Can I buy an apartment for him by selling property in India? How much should I ideally spend for this purpose?
—Manju Yes, you can certainly buy a house in Canada as RBI allows Indian residents u/s Section 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) to send up to $1,25,000 per year for any purpose, including buying any immovable property outside India. However, since you want to do this by selling your existing property in India, you will not be able to claim capital gains exemption under Section 54, in case the existing property being sold is a residential house; or under Section 54 F (in case the property to be sold in India is other than a residential house).
The Finance Act 2014 has amended these provisions and has specifically provided that the capital gains exemption under Section 54 or 54F cannot be claimed in case the residential house property to be acquired is situated outside India.You can save tax by buying any other residential property in India or by investing the capital gains in capital gains bonds of up to ₹ 50 lakh in a year. My brother has taken a bank loan for a property. He wants to gift a part of it to me. Can he do it?
— Rajiv Bhatt Your brother can certainly sell or gift part of the property to your name. Any change in ownership can only be done with the consent of the lender. The lender may require him to pay off the loan first or you may be required to become a co-borrower for the loan. It will also entail stamp duty and registration expenses. Various states have lower stamp duty rates for gifts made to relatives and you can take advantage of the relaxation of charges, if applicable to you. Can I take a joint loan with my sister? By taking it jointly, our loan eligibility will increase.
— Ankur Dutta It is very unlikely that the lender will allow your sister to join you as co-borrower for the loan. Normally lenders allow immediate kin like spouse, parents, son as coborrowers to the loan and a few lenders even allow brothers as co-borrowers. Most banks will provide a loan to brothers on a case-to-case basis, but it might be more difficult for a combination of brother and sister. If you can convince the bank that the income of the borrowers will constitute a single economic unit and is likely to remain so in the foreseeable future, they may agree. I have been working for the last five years and my monthly income is ₹ 25,000. I want to purchase a property costing ₹ 30 lakh. What is the loan amount I’m eligible for?
— Abishek Singhal Banks can grant loan up to a maximum of 80% of the agreement value of the property as a home loan. The overall eligibility will be based on your income, your regular outgoings and repayment track record. If you are below 40 years of age, banks will normally lend up to four or 4.5 times your gross annual income. You should be eligible for an approximate loan amount around ₹ 12 lakh at 10.15% - 10.25% pa for a tenure of 20 years provided you have no other loans to service. Hence, your down payment will considerably go up. You can, however, add your earning spouse/parents as a co-borrower. Harsh Roongta is CEO, Apna Paisa. He can be reached at email@example.com