I would like to share my experiences in going through a real estate deal pertaining to sale of my house. I have a rarely used property in Jharkand (formerly UP). This is a row house in a gated community built by Dilware Associates in 2009. I bought it thinking that I was going to settle down here, then moved back to Chennai as it was too difficult to stay away from Home Town. The house was locked for 6-7 years. I was approached by my neighbour Utkarsh through Whatsapp, he asked me if I am interested in selling my house and he is trying to buy it. I asked him to meet me when I come down for the bi-annual cleaning ceremony in Feb 2019.
Utkarsh came over to my house along with his wife and mother for a preliminary inspection. He met me at my house and he offered to buy the property for 60 Lakhs. Both his wife and mother were present during this meeting. I told him that I will think over it and get back in few days. I called Utkarsh again and confirmed verbally that the price sounds good, lets move forward with other formalities.
Going by the advice of my Realty Mentor Mr. Giridaran, I told Utkarsh that we will have to sign a Memorandum of Understanding to agree on the steps and a timeline to complete the sale. I even got a format of this agreement from my mentor, I did some basic adjustments and shared with Utkarsh.
As we both agreed to the deal and proceeded to signing, I got an alert from my mentor about checking the guideline value. Now I also remembered that my uncle sold his property below guideline value to his distant relative as a nice gesture. Later Income Tax Officials penalized my uncle, he had to shell out 30% on the difference between the Guideline value of the property and the sale value, and more importantly the mental trauma, it may sound trivial, but middle class layman does not deal with such things in day to day life. I did some more digging found out that as per Section 56(2)(vii)(b) of Income Tax Act, both Buyer and Seller get penalized for a sale below the Guideline value. This is to discourage the black money dealings. This is well illustrated in this article by ClearTax (tm and cc rights owned by ClearTax).
So now I started searching for a way to calculate guideline value. A lot of brokers, friends gave me some gyaan, that it is good amount, don’t worry and should not be less than guideline value. I could not get anyone to give me an exact calculation. There is government website with cryptic wordings especially meant to misguide a layman. Then I got reference of Mr Ballah through my friend, Mr. Ballah provides consultation for such deals with a fee. I approached him with the Draft of the MoU and Guideline value. He pointed out some significant terms on the MoU, such as nailing down the duration for getting the deal finalized, asking for copy of the DD or Cheque while registering the Agreement. And then also provided a confident guideline value. But he also could not provide a certificate instead mentioned that it will be printed on the agreement when registering the property but it is too late, by that time all the sale consideration amount is already finalized and beyond possibility of change. So I could never get a certificate of guideline value so as to show the Income Tax Officer later in case of any question. I am still trying….
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