Transfer of Ownership of the Plot

My mom had bought the plot from her brother in the early nineties. The plot had clear titles and all the papers were clean. If we had enacted a sale of the property, I had to pay a high registration and stamp duty. As the seller was my mom - we could transfer ownership though a gift deed. The registration fee would be 1/10th of that of a direct sale.

So we decided to get the property transferred to my name via a Gift Deed. For that there are two offices you need to go to.

1. The BBMP office in Koramanagala  - This is where you pay your property taxes and you can get your khata certificate and sanction plans etc.
2. The Registrar in Koramangala BDA complex - this is where you get your EC and register the property

We already had the Khata Certificate and Extract. We needed the encumbrance certificate form the registrar office. This is in BDA complex. SO we went there and applied for one. Again there are a list of document xeroxes that you need to submit. (Khata, sale deed, tax paid receipt etc.) Along with a fee of 210. The man at the counter asked us to come back after three days for the same. We got it after three days, no problem.

A friend suggested a person in the Registrars office who help us with the documentation for the Gift Deed. I know we could have done it ourselves, but honestly time is money. And if by paying him his *fees* we can get it done fast.. we would. We picked an auspicious date in December. After cross checking with the *person* at the registrars office we were set.

Khata Certificate and Extract

When my mom checked through her documents we realised that everything was upto date except that the dimensions of the plot were not entered in the ledger of the BBMP office. This we realized when we applied for Khata certificate and Khata Extract. (Rs. 125/- for each - computerized copy). The lady at the office told us to meet officer G and get it entered into the books. Officer G had an assistant R. R asked us to write a letter stating the need for the same. Requested copies of the title deed, latest tax paid receipt xeroxes and then said the file would be sent to officer G. Since we requested that it was urgent, he sent the file the same day. (We din't bribe him yet). Officer G asked us to come back at 3 pm. We did. He proceeded to open the ledger using the PID no. on the tax paid recipt and checked the details. After veryfying that it was a 30X40 plot according to the sale deed, he entered the same in the ledger. The ledger was then passed on to the computer section for entry. They told us that it would take one day to reflect. So we had to come back the next day and get the updated Khata Certificate and Extract.

What shall we do with the Plot?

The next week was spent debating on what I need to do about the plot. I already lived in a lovely rented apartment very close to office. My spouse had an ancesteral house that we intended to live in/ build on someday. So should I sell the plot and invest in an apartment? Or should I build in it and live there? Or should I build it and rent it out? Or should I just let it lie there and sell it after a couple of years. Capital gain! One whole week of going back and forth on various decisions.

Now let me tell you how I arrived at the idea of finally building a house on the plot for rent.

Location of the plot - Lets say close to Koramangala inner ring road. The rental incomes in these areas are quite high as the location is very close to most offices. Now why wouldn't I want to stay there? Because my spouse's ancesteral property is in a much better location. So in the long run we would finally want to settle there. Why wouldn't I just let it lie there and wait for capital appreciation? Because I need a way to reduce the tax burden (IT Act allows for deduction of principal and interest on home loan). Also I need to feel like I am making an asset. Why would I not buy an apartment instead? Because the cost of a decent 2BHK these days is minimum 32-45 lakhs. The rental income from the flat can range from 10-15K p.m. The alternative is to use the same amount to build a house with two floors and rent it out instead. The rental income would be 2 times the apartment as it has two floors! So all in all it seemed like a feasible option. (P.S. My mom was keen I build there as well... it was her ancesteral property, so that swung my decision too)

The Start

Like all stories this one started very innocently. I turned 30 and lived in a rented house. So I decided to invest my hard earned money into an apartment. Then mom stepped in and said... if you are going to invest big bucks in an apartment, then you might as well build a house. "I don't own a plot of land mom!", said I. And mom sprung a surprise on me...she gifted me a plot! Woo Hoo! And there starts the story and down the rabbit hole we go!