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Samkit Maniar  |180 Answers  |Ask -

Tax Expert - Answered on Jul 24, 2024

CA Samkit Maniar has eight years of experience in income tax, mergers and acquisitions and estate planning.
He has graduated from Mumbai’s N M College of Commerce and Economics and has completed his CA from The Institute of Chartered Accountants of India."... more
DEBASHISH Question by DEBASHISH on Jul 24, 2024Hindi
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Hi Samkit, The property is not registered yet. As it is an under construction flat. So Initial agreement done on Jan 2023. Actual registration happen only during possession(expected sept 2025).

Ans: There is an issue and that is where the ambiguity lies. There is no clear answer to this. Conservative view says you should take date of registration (i.e. Jan 2023 and hence deduction not available) however aggressive view says that it can be date of possession (i.e. Sept 2025 and hence deduction is available).
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I'm looking to buy a ready to move flat in Greater Noida West which is in possession from last 3 years but hasn't been registered yet. The owner have possession and allotment letters, so it will be directly transferred on my name when registered. Right now builder's RERA is expired due to some reason and banks have default the builder due to some of there/flat owner Non Payment of EMIs. None of the bank is directly funding to the builder but I've been said if I ask owner to get thr property registered on their name first then I'll get the funding. Now I want to ask is the property good to purchase in this condition. Also, the person who is helping owner to sell the property to me, says they'll buy stamp duty and on top of that thay can get the loan disbursed, RERA is not applicable in that case. Please share your views.
Ans: Understanding the Current Property Situation
Firstly, it's great that you are exploring the option of buying a ready-to-move flat. Greater Noida West is a developing area with significant potential. The property in question has been in possession for three years but hasn't been registered yet. The owner has possession and allotment letters, which is a positive aspect. However, some concerns need careful evaluation.

Evaluating the Legal and Financial Situation
Expired RERA Registration
The builder's RERA registration has expired, which raises a red flag. RERA registration is crucial as it provides transparency and protects buyers' interests. Without RERA, you may face legal uncertainties. It's essential to understand why the RERA registration expired and whether it will be renewed.

Builder's Financial Distress
The builder is in financial distress, and banks have defaulted on loans due to non-payment by some flat owners. This situation indicates potential financial instability. Ensure that the builder can resolve these issues and provide clear title ownership before proceeding.

Steps to Ensure a Safe Purchase
Registration in Owner's Name
You mentioned that if the current owner registers the property in their name first, banks might provide funding. This step is crucial for securing your investment. Make sure the registration process is completed before you proceed with the purchase.

Verification of Documents
Thoroughly verify all documents, including possession and allotment letters, and ensure they are authentic. Consult a legal expert to review the papers and confirm there are no hidden liabilities or legal issues associated with the property.

Financial Considerations
Bank Loan Approval
If the current owner registers the property in their name, securing a loan becomes feasible. However, confirm with multiple banks about their willingness to finance this property. Understand the terms and conditions clearly before committing.

Stamp Duty and Registration Costs
The seller's agent mentioned covering stamp duty and ensuring loan disbursement. Ensure you understand the implications of this arrangement. Verify that all costs, including stamp duty and registration, are transparently included in the purchase price.

Risks and Benefits Analysis
Potential Risks
Legal Uncertainties: Expired RERA and builder's financial issues can lead to legal complications.

Financial Instability: Builder's default with banks could impact property value and future transactions.

Loan Approval: Securing a loan may be challenging due to the current financial status of the builder.

Potential Benefits
Ready-to-Move: The property is ready to occupy, eliminating the risks associated with under-construction properties.

Location Advantage: Greater Noida West is a growing area, which could lead to property value appreciation over time.

Immediate Possession: You can move in immediately upon registration, avoiding delays common with new constructions.

Key Recommendations
Legal and Financial Due Diligence
Engage a Certified Financial Planner and a legal expert to conduct thorough due diligence. They will ensure all legal and financial aspects are transparent and secure.

Confirm Builder's Resolution Plan
Ask the builder for a detailed plan on resolving financial issues and renewing RERA registration. This information is critical for your decision-making.

Secure Bank Loan Pre-Approval
Before proceeding, get a pre-approval for a loan from your preferred bank. This step ensures that financing will not be an issue after the current owner registers the property.

Conclusion
Purchasing a ready-to-move flat in Greater Noida West can be a sound decision if all legal and financial issues are resolved. Ensure the current owner registers the property in their name first. Conduct thorough legal and financial due diligence with professional assistance. This approach will safeguard your investment and provide peace of mind.

By taking these steps, you can confidently proceed with your property purchase and enjoy the benefits of your new home in Greater Noida West.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in

..Read more

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Ramalingam Kalirajan  |7967 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Feb 15, 2025

Asked by Anonymous - Feb 15, 2025Hindi
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We are a family of three (me + my parents). I am 30 and have no plans on getting married. Will explore spirituality and try to be a social worker after working for 2-3 more years. We have a corpus of Rs. 1.1 cr invested in FDs. The interest generated (Rs. 8,00,000 p.a.) is withdrawn monthly and used for daily expenses. Please tell me - 1. How long can my corpus last if we keep withdrawing the same amount each year? 2. Is there a need to add more money in corpus? 3. How will inflation hurt and play a role?
Ans: Your situation is well-structured, and your financial discipline is impressive. Let’s break down your concerns step by step.

1. How Long Will the Corpus Last?
You have Rs 1.1 crore in fixed deposits (FDs).

Your annual withdrawal is Rs 8 lakh, covering living expenses.

The duration your corpus lasts depends on the FD interest rate and inflation.

If the interest earned matches your withdrawals, the corpus remains intact.

But if expenses rise due to inflation, the corpus may start depleting.

If inflation is higher than your FD interest rate, the corpus will shrink faster.

Over time, this gap can significantly reduce your savings.

Without additional earnings or reinvestment, depletion becomes inevitable.

A detailed cash flow analysis is necessary for exact projections.

2. Is There a Need to Add More Money?
Your current strategy works well for now.

But inflation will increase expenses each year.

FD interest rates may also decline in the future.

A 25-year time frame requires careful planning.

If expenses rise but income stays the same, your corpus may not last.

Having an extra financial buffer is always good.

You may need to add funds over time to sustain withdrawals.

Consider a mix of investment options for better returns.

Balancing risk and stability is key for long-term security.

3. The Role of Inflation
Inflation reduces the value of money over time.

What costs Rs 50,000 today may cost Rs 1 lakh in 15-20 years.

If expenses double, your withdrawals must also double.

But your FDs may not generate enough interest to support this.

Over time, the real value of your corpus declines.

This means either increasing your corpus or reducing expenses.

Investing in assets that beat inflation can help.

A financial plan with regular reviews is necessary.

4. Fixed Deposits – Strengths and Weaknesses
FDs offer stability and guaranteed returns.

But they may not keep up with inflation in the long run.

Tax on FD interest further reduces net earnings.

Interest rates fluctuate and may decline in the future.

Over-reliance on FDs can erode wealth over time.

A diversified investment plan is essential.

5. Alternative Investment Strategies
You can explore better investment options alongside FDs.

Actively managed mutual funds have the potential for higher returns.

Debt mutual funds offer stability with tax efficiency.

Some portion in balanced hybrid funds can manage risk well.

Conservative investment in gold can hedge against inflation.

Having multiple sources of income is always better.

Choosing the right mix of investments is crucial.

6. Steps to Strengthen Financial Security
Review expenses and identify areas for cost-cutting.

Maintain an emergency fund for unexpected needs.

Consider reinvesting some interest earnings to grow the corpus.

Diversify investments instead of relying only on FDs.

Keep track of inflation and adjust withdrawals if needed.

Reassess the financial plan every year.

7. Impact of Taxes on Your Income
FD interest is fully taxable as per your income slab.

High taxation reduces the effective return on FDs.

Some alternative investments offer better tax efficiency.

Choosing tax-efficient options helps preserve more wealth.

8. Planning for Spiritual and Social Work Phase
After 2-3 years of work, your income may stop.

Your corpus must fully support expenses post-retirement.

Ensuring a steady income source is essential.

Passive income streams like dividend-yielding investments can help.

Reducing lifestyle costs can make funds last longer.

Proper financial discipline is crucial for long-term sustainability.

9. Final Insights
Your financial setup is strong, but long-term risks exist.

Inflation, tax impact, and lower FD rates can hurt corpus longevity.

A well-diversified portfolio will offer better security.

Regular financial reviews help in adjusting to changing needs.

Adding funds to your corpus ensures stability for the future.

Prudent planning today ensures a worry-free tomorrow.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

...Read more

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