RE is really very profitable…I got this from a builder…and it is worth reading:
A builder buys 1000 sqm land in Goa for Rs. 1.5 crores.
Land purchase including stamp duty at 8% for registration is Rs.12,00,000.
Construction cost for 1000 sqm is about Rs. 2.6 crores.
Sanctioned plan: Cost of Architect plan @3% (Rs. 8L)+ RCC (Rs 5.3L), of construction cost + infra tax @ Rs. 2.6L….so its totals like that:
Land cost 1.5cr+ brokerage 3L+stamp duty Rs.. 12L+Plan 8L+5.3+2.6+5L miscellaneous
= 1.86 crores.
builder now has 13 apartments of 100 sqm…selling each flat for Rs. 45 lakhs.
Purchaser pays 45L+GST+ Stamp duty+ Registration+brokerage
GSt 5.6L+SD 1.35+ Reg 90k+90k brokerage
Who really earned money?
Land owner paid Income tax of course….when he sold to a builder.
Sale of 13 houses @ 45L = Rs. 5.85 crores
Cost of construction – Rs. 2.6cr
Land, arch, rcc – Rs. 1.8 cr
So the builder earned Rs. 1.45 crores, ASSUMING ZERO INTEREST COSTS, he will pay tax of Rs. 45L. Therefore his profit is Rs. 1 crore.
Govt earned Rs. 10L from land owner
Vat, stamp duty, ….etc. Rs. 1.8 crores
From builder Income tax: Rs. 45 L
So the builder took the risk (and if he paid interest that has been ignored) and earned Rs. 1 crore over two or 3 years.
the Govt earned Rs. 2.45 crores.
Not bad at all.
And you think RE is a great investment? It is not. Just that people are foolish and have no clue how to calculate returns.
Omg that is another topic is it not?
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