I read a news item yesterday. A pair of real estate agents were robbed at gun point and Rs. 8.5 million was stolen. The newspaper report stated blandly that the duo was making a down payment for a property deal. Why on earth were they paying so much in cash!
The politicians make so much fuss about money parked in Swiss banks; yet I do not find them changing rules to make it easier not to have cash dealings in property.
I would start by allowing asymmetric reporting. The buyer may want to pay in black. The seller may not want to have black. Let the seller report the additional income from the property sale and let it be treated as taxable income.
We are becoming a mobile society - job changing is common. We may shift across cities or areas within the same city. It should be easy to buy and sell property. The transaction cost for transfer of property needs to come down. Why not model the transfer costs on VAT. The tax should be payable only the net gain in property value. So, if I buy today and sell tomorrow at the same price, I do not lose 6 to 10% in taxes only.
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