NOTE BAN FAILS TO STOP SALE OF HOUSES IN BLACK

HAS DEMONETISATION AND THE INCREASED WATCH ON CASH FLOWS AFFECTED THE FLOW OF BLACK MONEY IN THE REAL ESTATE SECTOR? HAVE BUYERS AND SELLERS TOTALLY GONE WHITE? ARE PROPERTY PURCHASES STILL BEING PAID FOR IN CASH?

TAKE A LOAN, REST IN CASH L. VENKAT RAM REDDY I DC HYDERABAD, MARCH 25

A man in Uppal wants `30 lakh for his decade-old two-bedroom 1,200 sq.ft. He had purchased it for `17 lakh in 2007. Of the `30 lakh, the owner wants`13 lakh in cash and the rest in black.

Why would he want to risk a black money transaction, he was asked. The owner replied that the market value of the flat was `13 lakh, though the actual market rate in Uppal had doubled in the past 10 years.

To avoid paying capital gains tax, the owner wants the `17 lakh to be paid in black.

“It’s a win-win situation for both. Owners can avoid capital gains tax, buyers will benefit as they would pay less for registration of property that has a smaller value,” he said.

“The sale agreement will be for `13 lakh and I want the property to be registered for that amount,” he said.

In Yadadri, a man has put 10 acres of land on sale. The government value is `4 lakh per acre, the prevailing rate is `25 lakh. “I want only `40 lakh in white and `2.10 crore in black,” he said, The land value has zoomed after the TRS government created a new district and began a project to develop the Lakshmi Narasimhaswamy temple at Yadadri. PAY IN BLACK, SAVE ON TAX KAMALAPATHI RAO H. I DC HYDERABAD, MARCH 25 A realtor is selling 150, 200 and 300 sq. yd plots at Pocharam near Infosys campus. The catch? He wants the property value as per government records to be paid in white and the rest in black.

Land in the area is being sold for `20,000 per sq. yd while the government value is `7,000. Therefore, anyone purchasing a 150 sq. yd plot should pay `10.5 lakh through cheques or online transfer. The remaining `18.5 lakh is to be paid in black. WHY DOES HE DO IT? The realtor said: “I want to leave this business and invest the money elsewhere. I will need to pay tax towards capital gains as the land was purchased by our forefathers when it was cheap,” he said. He had a bit of ‘advice’: “If you pay all the money in white, you will need to pay more for registration. If you adopt a blackand-white method, you will need to pay just one-third.”

ONE OWNER WHO WANTS IT ALL WHITE MAHESH AVADHUTHA I DC HYDERABAD, MARCH 25

The owner of a two-bedroom flat that is on sale at Dilsukhnagar is definitely a rarity. He was ready to accept cash in white — the `38 lakh that he had quoted for his nearly 20-year-old apartment with car parking.

Was he not aware of the tax burden? “This will be the norm and I am willing to pay the required taxes,” he said.

In Malkajgiri, a builder had priced his 2BHK flats at `28 lakh and 3BHK flats at `38 lakh. The obvious question. How much in black? He was willing to take up to 15 per cent in cash, the rest had to be white.

A builder said mostly no one would ask for black money while selling new properties costing up to `80 lakh, as the buyers could get bank loans. The down payment that these families make is also routed via banks so it is accounted for, he said.

There was a downside to demonetisation. The cost of construction had increased by almost `200 per square feet.

Construction material suppliers are collecting money in white and giving proper bills. They are charging more to pay their taxes. “The burden will be passed on to the customer. The cost per square feet which used to be `2,500 would now be `2,700 in new constructions,” he said.

2/3 IN BLACK, ADVICE FREE KANIZA GARARI I DC HYDERABAD, MARCH 25

`15 lakh in black and `35 lakh in white. That is what a builder at Saket near ECIL wants for a `50lakh two-bedroom house.

How does a salaried person, with no scope for illegal earnings, get this kind of black money?

One suggestion is to take the help of businessmen; they could help convert money.

The builder said he would want nearly two-thirds of the money in black, even if the buyer went for a home loan.

Try borrowing the money from family and friends, he suggested.

IF YOU PAY ALL THE MONEY IN WHITE, YOU WILL NEED TO PAY MORE FOR REGISTRATION. IF YOU ADOPT A BLACKAND-WHITE METHOD, YOU WILL NEED TO PAY JUST ONE-THIRD