The switch of a home from a father to a son may be thought of a present

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My father had bought a flat in Navi Mumbai for Rs5 lakh in 2002. He’s 67 now and retired, with an annual pension of Rs2.25 lakh. If my father transfers this identical flat in my title, is there any stamp responsibility implication?

I’m planning to purchase one other flat (under-construction property) in Mumbai, wherein my father is a co-applicant. I’ve taken a mortgage of Rs80 lakh. Simply earlier than possession of the flat in December 2019, my father would promote the Navi Mumbai flat for round Rs45 lakh and switch the quantity to pre-close our mortgage of Rs80 lakh. Right here, we’re contemplating that my father doesn’t switch the property to me.

Will my father get the good thing about saving tax on long run capital positive factors on sale of the home?

—Rohan Patil

The switch of immovable property from father to son may be thought of a present. As per the Switch of Property Act, the switch of home property as a present must be effected by a registered doc (reward deed) signed by the individual gifting the property. The quantity of stamp responsibility payable on reward deed is identical as in a daily sale. Nevertheless, there’s an exemption in case of specified family members, which incorporates presents from father to son. In Maharashtra, the speed of stamp responsibility on such a transaction was restricted to Rs200 until 16 Could 2017. Now the stamp responsibility relevant might be 3% of the market worth of the transaction.

Sale of property and reinvesting it in one other property provides the good thing about exemption of long run capital positive factors underneath part 54. In case your father sells the Navi Mumbai property to half pre-pay the mortgage, he is not going to must pay long run capital positive factors tax.

A person could be a co-applicant in a house mortgage with out being a co-owner of the property. However to get the tax profit (underneath part 54) on reinvestment of sale proceeds of one other home property, the person must essentially be a co-owner of the brand new property. If the brand new property bought is thru a mortgage, the fee will go to the mortgage account and to not the builder straight; therefore, the person additionally must be a co-applicant within the mortgage. You may additionally wish to examine the next factors earlier than deciding to pre-pay:

•Examine your liquidity place: is there any want that may come up in brief time which would require that cash? Attempt to preserve the cash from the sale proceeds for these wants.

•Use solely the capital positive factors quantity to pre-pay the mortgage. Use the remaining for investments if you will get higher returns than your house mortgage price.

I’ve a house mortgage with State Financial institution of India (SBI) on a base price of 9.15%, with an impressive quantity of about Rs11 lakh. The reimbursement time period is 15 years and EMI is about Rs15,000.

Can I swap to MCLR (marginal value of funds primarily based lending price) now, or ought to I watch for a while for MCLR rate of interest discount? If I swap now, how a lot will I profit?

—Dheena Deenan

Base price system was launched from July 2010. The banks referenced their lending charges on a ‘base price’ which was computed on the price of funds to the financial institution. Nevertheless, there was huge variation in the way in which totally different banks calculated this price, therefore the Reserve Financial institution of India (RBI) launched MCLR, which proposed a uniform marginal value funding methodology for all banks. MCLR was launched in September 2015 and made relevant for all new loans from April 2016. It was anticipated that any change in rates of interest within the system will replicate sooner within the dwelling mortgage charges for purchasers. In your case, I presume that the unique mortgage tenure was 15 years and the unique mortgage quantity was Rs15 lakh. Accordingly, at 9.15% the EMI works out to Rs15,349.

Based mostly on this, 77 months’ EMI has been paid and 103 stay. The full curiosity paid, when you proceed on this price, is about Rs4.88 lakh.

Should you shift to MCLR and get a price of 8.5% for 103 months, your EMIs will cut back to about Rs14,976 and the overall curiosity within the remaining tenure might be about Rs4.50 lakh.

The discount in curiosity and EMI shouldn’t be giant. There might be different expenses that the financial institution will levy to make this modification. The choice to shift to MCLR must be made on the saving that may accrue to you after contemplating the precise price and the costs levied for the change. Additionally, when you shift to MCLR, you can not return to base price. And, if charges rise sooner or later, you could find yourself paying extra.

Kiran Telang is co-founder and director of Dhanayush Capital Advisors Pvt.Ltd.

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