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Kamshet- The Hottest Spot for Investors Seeking High Returns
Commercial real estate is among the fastest-growing markets in India. Offices, retail stores, institutions, and industrial developments primarily fall under this umbrella. Commercial property is a property owned to generate income through business activities.
While many prefer developed structures, commercial plots have also been at the center stage due to higher appreciation and relatively lower investment costs than other asset types in commercial real estate.
However, being abreast of the nuances of buying commercial land is crucial to avoid administrative and legal hassles. From paperwork to zoning laws, there are various factors to look into. Let’s look at essential tips for buying commercial land in India.
Types of commercial property
Retail - Retail Shops, Stores, Malls
Industrial- Warehouse, Manufacturing Plants , Factories
Hospitality-Tourism Agencies, Motels, Hotels
Institutional- Schools and Colleges
Office Spaces- Corporate Offices
What’s to check before buying a commercial plot in India?
Review the Location
- Location Matters: The most critical factor in buying commercial land is its location. It should be easily accessible with good infrastructure. A prime location ensures higher demand and, in turn, leads to higher profits.
- Zoning System: Indian civic authorities use a zoning system based on Euclidean geometry to classify land for commercial purposes. They divide towns into districts with specific zones for different land uses, either permitted or prohibited.
- Integrated Zoning: As available land decreases, zoning becomes more integrated. This means that the planning of various zones becomes more coordinated to optimize land usage efficiently.
- Clearly Demarcated Commercial Zone: When buying commercial land, ensure it falls within a clearly marked commercial zone. This guarantees that the area is suitable for commercial activities and compliant with local regulations.
- Avoid Uncontrolled Development: Avoid land with uncontrolled development like unauthorized boundaries, fences, or incompatible structures within the permitted area. These issues may lead to legal and operational challenges later on.
- Types of Commercial Activities: Commercial land can be used for various purposes, including warehouses, offices, restaurants, shops, and industries. The proximity of one commercial zone to another depends on the type of activity and vehicular traffic.
Taxes and Returns
- Taxation of Rental Income: Rent received from any property, including commercial property, is taxed under the head 'income from house property' in India.
- Actual Rent or Reasonable Rent: The taxation is based on either the actual rent received from the property or the rent that can reasonably be expected from it, whichever is higher.
- Standard Deduction: A standard deduction of 30 percent is allowed on the rent received. This means you can deduct 30 percent of the rental income as an expense before calculating the taxable income.
- Deductions for Building Repairs and Renovations: You can claim deductions on the amount invested in building repairs and renovations for the commercial property.
- Interest on Loan: Under Section 24 of the Income Tax Act, you can claim the interest paid on the loan taken for the commercial property as a deduction. This includes processing fees and prepayment charges paid to the financial institution.
- Availability of Standard Deduction: The standard deduction of 30 percent is available even if the actual expenses on the property are higher or lower than that percentage. It simplifies the deduction process.
Check Documents
- Ownership Details: Review the property's registration papers to ascertain the number of owners. Knowing the ownership structure is essential to ensure a smooth and legitimate transaction.
- Seller's Right to Sell: Verify if the seller has the legal right to trade the commercial property. Confirm that they have the authority to sell the asset and that there are no disputes or legal issues surrounding the ownership.
- Existing Loans or Pledges: Check for existing loans or pledges against the land parcel. Knowing if the property has been used as collateral for any debts or financial commitments is crucial.
- Clearance of Outstanding Dues: If the land has been mortgaged in the past, ensure there are no outstanding dues related to the mortgage. The seller should clear any pending payments before the deal is finalized.
- Title Search: Conduct a thorough title search to verify the property's history and ensure no legal encumbrances, liens, or claims could affect your ownership rights.
- Encumbrance Certificate: Obtain an encumbrance certificate from the registrar's office to verify if there are any legal claims or liabilities on the property.
- Approved Land Usage: Ensure the land is categorized as a commercial plot in the official records and falls within the designated commercial zone.
- Pending Litigations: Check for any ongoing legal disputes or litigations related to the property. Purchasing a plot involved in legal battles can lead to future complications.
- Land Boundary and Area: Verify that the boundaries and area mentioned in the registry papers match the actual physical boundaries of the land.
- Property Tax Records: Review the property tax records to ensure the seller has paid the appropriate taxes for the commercial plot.
Key Budget Highlights: Boosting Affordable Housing and Modernizing Land Records
On July 23, Finance Minister Nirmala Sitharaman delivered a significant speech outlining the government's plans to boost affordable housing and modernize land records. Here's a simplified overview of the key points:
Introduction of Bhu-Aadhaar and Land Record Digitization
To streamline land administration, the government proposed the introduction of a unique identification number for land in rural areas, known as 'Bhu-Aadhaar.' This will be part of a broader effort to digitize all land records in urban areas. Such reforms are expected to simplify land transactions and increase transparency.
For rural areas, the focus will be on:
- Creating a land identification system (Bhu-Aadhaar) for better land management.
- Digitizing cadastral maps to accurately reflect land ownership.
- Surveying and updating land records as per current ownership.
- Establishing a land registry and linking it to farmers' records.
Urban areas will see:
- Digitization of land records with GIS (Geographic Information System) mapping.
- Implementation of an IT-based system for property records and tax administration, which will improve the financial position of urban local bodies.
Incentives for States and Reforms
The Finance Minister mentioned that states will be incentivized for implementing land-related reforms over the next three years. This includes both rural and urban areas, covering aspects like land administration, urban planning, and building regulations.
Urban Development Proposals
Under the PM Awas Yojana Urban 2.0, the government plans to address the housing needs of 1 crore urban poor and middle-class families. This initiative will involve an investment of ₹10 lakh crore, with a central assistance of ₹2.2 lakh crore over the next five years. Additionally, there will be provisions for interest subsidies to make housing loans more affordable.
Impact on the Real Estate Sector
These measures are expected to boost home-buyer sentiment across major cities by rationalizing stamp duty and supporting women homebuyers. The digitization of land records and the introduction of new technologies will enhance transparency and efficiency in the real estate sector.
Conclusion
Need expert guidance for your land purchase? Get stress-free documentation and Sseamless transactions with our specialist support at Genuine Plots.
Understanding the Ferfar Document in Maharashtra: A Beginner's Guide
In Maharashtra, the Ferfar document plays a crucial role in managing land records. It's an official record that updates any changes made to the original land record known as the 7/12 extract. These changes could include updates in ownership, land type, boundaries, and other details.
Why the Ferfar Document Matters
The Ferfar document is important for several reasons:
- Keeping Records Updated: It ensures that land records are kept current, showing the latest information about who owns the land and how it's used.
- Legal Support: It provides legal clarity and support in property transactions and disputes, helping to resolve issues based on the most recent land record updates.
- Loan Applications: Banks often require the Ferfar document when approving loans secured against land. It shows that the property details are accurately recorded.
How to Get the Ferfar Document Online
Accessing the Ferfar document online is easy with these steps:
- Visit the Official Website: Go to the Maharashtra government's land records website.
- Select Your District: Choose the district where the land is located.
- Enter Property Details: Provide information like the survey number and village name.
- Find the Ferfar Option: Look for the option to view or download the Ferfar document.
- Download and Review: Once found, download the document and check that all details are accurate.
Conclusion
Understanding the Ferfar document is important for anyone involved in buying or selling land in Maharashtra. It ensures transparency and legal compliance in property transactions. For reliable advice on land records and property dealings, consider seeking assistance from professionals who can guide you through the process.
For personalized assistance with land records in Maharashtra, contact us today. Let's ensure your property transactions are based on accurate and verified land records.
The Maharashtra state government has launched an online platform called Bhulekh Mahabhumi to streamline the process of accessing state land records. This initiative aims to make it easier for farmers and landowners to manage their property details.
What is 8A in Land Records?
In land records, 8A Utara refers to a document containing crucial land ownership information. It includes the location, district, account number, taluka, village, and other relevant data. Both the 8A extract and the 7/12 extract are essential documents to establish ownership of land.
How to Obtain 8A Utara in Maharashtra:
- Visit the Mahabhulekh website.
- https://bhulekhmahabhumi.com/
- From the drop-down list on the homepage select your region.
- You will be redirected to a new page where you should choose the 8A option.
- Fill in the fields for village, district, taluka, and other required details.
- Enter your personal information such as first name, last name, account number, and full name.
- Provide your mobile number and select the '8A' option.
- Enter the security code and click "Verify Captcha to View 8A." The 8A details will then be displayed on your screen.
Importance of Form 8A Maharashtra:
- Legal Proof: It acts as evidence of land ownership, frequently needed for matters concerning property.
- Loan Availment: Having 8A helps in obtaining loans such as crop loans and educational loans.
- Government Record: It confirms that government files officially record your land details.
In conclusion, ensuring the correct land documents like 8A is crucial for securing your property rights and accessing financial benefits. If you need assistance verifying your land documents' legality, consider consulting with experts at Genuine Plots. They can help ensure your property transactions are legally sound and secure.
Understanding GST in Real Estate Impact on Land vs Plotted Developments
The introduction (GST) in India on July 1, 2017, brought significant changes to how taxes are applied in various sectors, including real estate. This blog aims to clarify how GST impacts the sale of land versus plotted developments under this new tax regime, particularly for buyers and investors.
GST does not apply to those looking to purchase vacant land without any additional amenities, such as roads or pipelines. This means buyers only need to pay stamp duty, a one-time fee paid to register the property. However, if the land is sold with developed features like infrastructure or services, such as roads and utilities, GST at 18% is applicable on the development portion.
CGST Act
According to the CGST Act, the sale of plain land without any construction is considered an immovable property and is exempt from GST. On the other hand, plotted developments that include added amenities are classified as a 'supply of service,' attracting GST on the development charges.
This distinction is crucial for both buyers and investors in real estate. Understanding whether GST applies can help in budgeting and making informed decisions. For those interested in straightforward land purchases, knowing there are no additional GST costs beyond stamp duty simplifies financial planning. Conversely, buyers looking at plotted developments with added amenities should be aware of the GST implications on the developed components.
Summary
In conclusion, while land transactions remain free from GST, plotted developments involving infrastructure additions are subject to GST at 18%. This clarity empowers buyers and investors to navigate the real estate market with confidence, ensuring they factor in all applicable taxes and costs before making their investment decisions. Understanding these nuances can lead to smarter financial planning and more informed property investments.
R-Zone stands for residential plots that are available for building homes in both urban and rural areas. In Maharashtra, special planning authorities like the City and Industrial Development Corporation of Maharashtra (CIDCO) and the Mumbai Metropolitan Region Development Authority (MMRDA) decide where these R-Zone plots will be located.
Types of R-Zone Plots
There are two main types of R-Zone plots:
Purely Residential (R1 Zone)
- Description: These plots are meant only for building homes.
- Location: They are within 12 meters of the nearest road in open areas, or 9 meters if the area is crowded.
- Permissions: You can build homes here without needing special permission from the authorities.
R2 Zone
- Description: These plots are for residential purposes but also allow for commercial, institutional, and medical buildings.
- Location: They are at least 12 meters away from the nearest road in open areas, or 9 meters away in crowded areas.
- Permissions: All types of residential developments are allowed here, including schools, offices, and hospitals.
Risks of Investing in R-Zone Plots
Investing in R-Zone plots has some risks, mainly if the property's ownership documents are not clear. Here are some tips to reduce risks:
- Check Ownership Documents: Make sure all ownership documents are up to date and accurate.
- Encumbrance Certificate (EC): This certificate should show no legal issues, complaints, or disputes regarding the property.
Converting R-Zone Property to Non-Agricultural (NA) Property
You can convert an R-Zone plot to an NA plot in Maharashtra. Here’s how:
- Application: Apply to the local municipal corporation.
- Payment: Pay 0.05% of the ready reckoner or circle rate of the location.
- Ownership Check: Ensure the property title is clear and marketable.
- Verification: Have a lawyer verify the deed.
- Encumbrance Certificate (EC): Obtain an EC from the local sub-registrar’s office showing no issues with the property.
Once everything is confirmed and there are no disputes, you can convert the R-Zone property into an NA plot and proceed with your building plans.
Conclusion
Investing in R-Zone plots presents a promising opportunity, provided thorough document scrutiny and assurance of legal compliance. Whether your goal is residential construction or commercial development, familiarizing yourself with the diverse categories of R-Zone plots and adhering to proper protocols are crucial steps toward making informed and advantageous investments.
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