Black money while buying a property

[mahan123]

Hi,

Recently I was in a process of buying a constructed property which I had to drop eventually because of black money that owner demanded.
Later I checked with many properties sites or constructed houses, people are demanding black money.

I dont know from where I should get black money to own a property. I rely on bank loans for the majority of the funding and remaining 20% of money, I can adjust through my savings(which are from genuine ways). I dont have any business or source where I can earn money without letting govt. know

I hope many of you must have faced this.

Is it not possible to buy a property without black money??

Please give your valuable thoughts on this.
Regards,
Mahan

[vsathishmybda]

Hi,

As i mentioned in one of my previous posts, most Seller's will demand the Purchaser's to register only for guidance value and the rest of the difference in amount they want in Black(not shown to Govt. in the form of addition to Taxable Income towards Income Tax Calculation) so as to avoid Capital Gains Tax Implications. The lesser the Capital Gains shown to Govt., the lesser the Capital Gains Tax.

You can register a property equal to the market value/selling price (provided its equal or above guidance value).
99.9% of the Seller's will not want this as the implication is that, the entire market value amount registered will be a Capitals Gain for the Seller which has Income Tax Implications.

This is one of the main reason's why majority of living population go for Flats/Apartments rather than purchase of site. For Flats/Apartments almost all banks offer Home Loans between 70% to 85%.


BR,
Sathish V

[msn1270]

Mahan

Wherever Agents involvement or influence is there on the seller, This situation is there. You have minimum solution for such things. You can negotiate that you will register the property at Govt Guidance Value and the rest you will pay in DD/Cheque only and a very small amount as Cash. There are banks like Axis, IDBI, which gives loans for this kind of transaxtions also. They give a DD for the Government Guidance value for the registration and a separate DD for the remaining amount.

There are very few buyers who are ready to sell at 100% transparent price in terms of DD or Cheque. Finding them needs greater Effort.

[nagarjunkatta]

Hi All,

msn1270 is right!! even i heard the same from one broker that the extra amount can be given in another DD/Cheque and this is already happening with Axis and IDBI Bank. But i have one question here.
1. Again the DD/Cheque will be in the name of the Seller, how can he evade the tax? I dont know much but msn1270, can u plz answer how that separate DD/cheque works!! bcoz i am in the same situation of Mahan, whenever i ask any owner for a white transaction, they say they want to consult their lawyer and they never came back. Everyone needs Black money.

2. And will the Owners accept this kind of transaction(2 DDs/Cheques)?

Cheers
Nagarjun

[msn1270]

Usually the Financing Banks give both the DD's to the Seller's name and his account Number. But I'm not sure whether DD's can be issued for the same seller's name, but different accounts.

In this case, by registering at the Guidance value, Buyer pays lesser Stamp Duties which goes to the State Government. But as the same sellers name, account number and his PAN Card details are validated by the financing banks while issuing the DD"s, the same information can be obtained by the Income tax department to scrutinise his Income tax returns for the transactions anytime.

[pradeepk]

In case of split DDs, banks issues both DDs on seller's name for same account number. I heard , recently AXIS bank has stopped issuing split DDs.

[nagarjunkatta]

Hi Pradeepk,

Then what is the use of split DDs. How does it help the owner to evade tax?

[shivali]

I have the same question. How does it work out? if bank is giving money (even if two separate cheques), does it not become all white?

[kbaijuk]

When I checked, loan guys told that Axis bank will give loan based on the sale agreement value so that we can register the property on guidance value. I dont know how builder can save tax in this case as remaining money is given to them as DD, but they can always keep the money till 3 years for further investment options without paying tax. I think no need to pay any tax if you are re-investing your capital gain.

[agopal]

Whenever a property is registered, both buyers/sellers PAN number is recorded. If the registration value is greater than 30 lakhs, this info is sent to the
Income Tax Department. In case of split DD/cheque, the seller can escape the Income Tax Department by not reaching the 30 lakh threshold. Though the
second DD is still in his name and traceable to his account, it is my belief that DD/Cheque transcations are not monitored that closely, so the seller
hopes to escape the Income Tax still.
Just my view on this situation.