New depreciation formula taxes old properties in Mumbai
Q: A new state government circular that ask to increase stamp duty revenue by changing the method of calculation of depreciation in respect to old buildings has caused a panic in the real estate industry.
This method will create complication for valuation of property as well for computation of capital gain tax. In spite of the fact that the govt. may receive additional revenue at the beginning by way of an increase stamp duty. But it will dampen the number of transaction in the log run.
Right Aveek, This circular will definitely change the method of calculation of depreciation in respect of old buildings and thus increases the value of constructed properties significantly.
Yes, It will not only increase the value of constructed properties but also the new method of calculation increase the ready reckoner value of a property by 30% because the depreciation is now allowed to a much lower range. In this way it will increase the stamp duty amount.
At all cost, it will impact the property buyer, who now has to pay extra stamp duty while the seller has to pay capital gains tax on this additional amount.
@Manilal Patel, Forget about buyers and developers. This circular will have a negative impact on the volume of business in real estate in Mumbai as well as the entire state.
Hi Vinu, Sometimes i got confuse that where i am going to buy property or to buy taxes. Don't you think that there are varieties of taxes a buyer has to pay while they go to buy property.
And this method of calculation will result, the combined liability of both the buyer and seller of a property will increase by up to 73% when they pay stamp duty, income tax and capital gains tax.