Comment by msiyer | Hacker News Reader

Comment by msiyer | Hacker News Reader

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> You salary is taxed at 35% effectively

This is what is directly visible. Less than 3% of the population pays income tax while tax is deducted at source for the salaried class:

https://economictimes.indiatimes.com/news/economy/policy/why...

If you dare to save, the interest earned is taxed. If you try to spend, the spending is taxed - buy a house or a car or a motorcycle, all luxury items by Indian government's standards, you are taxed heavily. The bribes collected by the government officials increase the tax burden. By the way, bribes are now expected and people refusing to take or give are looked down upon: https://www.deccanchronicle.com/nation/current-affairs/21111...

All this while the mega rich are enjoying tax breaks.

> rent seekers who will push for a 10% increases Y-o-Y unless

The landlords are fleecing tenants. However, it is the tenants' responsibility to make sure the landowner pays tax: https://www.livemint.com/Money/hfutqMoI7miJYiIidCNV4M/If-mon...

Completely agree. I know people who claim their Net Revenue is less than the amount I pay in taxes and yet they have bigger cars, keep multiple servants, and enjoy foreign holidays.

Under this system everyone would like to hoard as much money as possible. Even if it results in squeezing the others unfairly.

That is why the indirect taxes(fuel), other sales etc taxes are so high.

There is also a suggestion that they do away income taxes completely, and may be tax petrol by additional 30 rupees/liter.

>>The landlords are fleecing tenants.

As of now it takes savings of a life time to afford a home in big cities. Its tenants who are getting the better end of the deal.

You have to become a land lord if you are saving up for grandchildren(many do).

Most landlords have owned properties through inheritance which suddenly jumped in value when business grew around them. This in turn happened because Governments were complicit.

Yes, that's called investing.

You can start now. Or wait for the next 20 years, and complain that others did and you didn't.

Also a lot of middle class can and does invest. It's the people with inability to defer instant gratification or just lazy are the ones at peril here.

You are redefining investing. It is investing when you are deliberately holding on to something with an expectation of higher returns in future. You are implying that ancestors of these landlords knew business will suddenly bump up in late 90s.

It's sheer luck,government complacency and nothing else. If you want to call it investing, fine with me.

> Also a lot of middle class can and does invest.

Yes the little they can save gets invested in already inflated properties or gold. Average middle class would not like to venture our into investing in unknown because they do not have the will to lose the little they have saved.

> It's the people with inability to defer instant gratification or just lazy are the ones at peril here.

You think having a car, living close to school and work in good neighborhood is instant gratification. I have lived in shady neighborhoods with narrow dusty street without any trees and boy it's not fun at all. If you think moving out of those places is called instant gratification then it's hard to argue.

>>You are implying that ancestors of these landlords

'Ancestors' makes it feel they are from the 15th century. In reality these are people from 1960s/1970s. In most cities at that time buying a property was a no-brainer investment. There were public sector companies springing up all over the place, and the first round of urbanization was well in progress.

Also you don't even have to go that far, even in the 1990s, during the peak of onsite-money techies in Bangalore were swimming in, most currently high valued properties in the vicinity of ring-road today were available for almost free(Comparative to IT salaries of the day). Like 75 - 200 rupees/psqft.

The real problem is. Property hunting and buying is a long drawn process, that spawns over a year. Everything from scouting for opportunities, to negotiating, getting legal work done, raising money through loans, paying taxes, registration, long term care and maintenance are high effort consuming activities, that will drain your energy and stretch you will power to water film thinness.

Most of the crowd either does not have what it takes to think in terms of such long durations of time. Or even if they do, they have to undergo that process several times to build a decent portfolio of properties. That means weekends, and other holidays all go away towards this. This is above beyond any other maintenance you have to do. That is far away from opportunities being invisible. These are issues related to personal enterprise.

That's one big reason why Mutual funds have taken off so well.

But big returns await for those people who can scale the real estate mountain even today.

>>If you think moving out of those places is called instant gratification then it's hard to argue.

The good part is you will get what you want. So everybody will get what they want.

If some one wants properties as investment they will get it, and if some one wants to spend that money for a good quality of living they will get that too.

Those decisions have consequences. You just have to understand them and be fine with it.

Most of the landlords are not the IT guys mind you. They are mostly the former farmers who have held large pieces of land around towns. I don't know about Bangalore, but farmer communities around Delhi have grown rich by coming together as vote bank and getting compensated multiple times for the same pieces of lad they.

> Also you don't even have to go that far, even in the 1990s, during the peak of onsite-money techies in Bangalore were swimming in, most currently high valued properties in the vicinity of ring-road today were available for almost free(Comparative to IT salaries of the day).

How many were employed in IT during that time? As far as I remember, IT scene exploded circa 2000 onward when likes of TCS, and Infosys started recruiting via truckload. Like 75 - 200 rupees/psqft.

You are implying that every single IT guy had the opportunity to earn mighty. Those few who had the opportunity have done exceptionally anyways but that is a minority.

> Most of the crowd either does not have what it takes to think in terms of such long durations of time.

Yes hence they think of the short term i.e. earning as much as possible via whatever means necessary. My original comment was an answer to GP's moralistic attitude. If that 18 year old kid wants to be a Doctor to earn as much as possible that is because he has seen dumb ass people around him getting richer.

How that is any immoral then someone profiting insanely from something their grandfathers hoarded?

>>Most of the landlords are not the IT guys mind you.

Yes, that exactly what I'm saying. If you have a 20+ year timescale you don't have to earn very high to make these investments.

>>but farmer communities around Delhi have grown rich by coming together as vote bank and getting compensated multiple times for the same pieces of lad they.

They have a right to. Getting rich isn't exactly a crime.

>>How many were employed in IT during that time? As far as I remember, IT scene exploded circa 2000 onward when likes of TCS, and Infosys started recruiting via truckload. Like 75 - 200 rupees/psqft.

Plenty. There was also Gulf money. The real issue is, again, very few people can think on a 20+ year timescale.

>>You are implying that every single IT guy had the opportunity to earn mighty.

To be super frank with you. These were throwaway prices even back then. Most investors turn out be people with retirement money, many times Auto drivers, small kirana shop owners etc. Which is why there is so much resentment now. There are people who had 100x advantage over these people, and there has been drastic reshuffling of seats.

>>If that 18 year old kid wants to be a Doctor to earn as much as possible that is because he has seen dumb ass people around him getting richer.

There is nothing dumb about making long term investment decisions.

>>How that is any immoral then someone profiting insanely from something their grandfathers hoarded?

Nothing immoral going on here. Somebody decided to work hard, invest in lands, and ensure their grandkids are well off. If you don't want to invest and do all this, it's really your choice. Why do you suggest others make the same mistake?

> Nothing immoral going on here.

Then we agree that moralize the choice kid is making is completely uncalled for. Capitalism is driven by greed of money so bringing any other criteria except money does not make sense unless it is applied uniformly.

Income tax is ridiculous. Especially in India with the stats I presented.

How exactly are tenants getting the better end of the deal? It is the tenenat who:

- pays the rent which is arbitrarily high and increases every year thereby offsetting the puny salary hikes

- bears the burden of excess tax because the landlord refuses to pay taxes on money earned from rent

- has nothing to show for the money spent in rent

- loses a large part or whole of the "security desposit" when shifting.

Taxes are high because a minister decides to charter a plane and fly thousands of miles to meet another minister for 30 minutes. Taxes are high because when they meet they decide to exchange bouquets that cost tens of thousands of rupees. I can go on and on...

Almost any economy where buying is expensive, renting works out cheaper.

From the perspective of owning a property. You have far higher costs. That starts with firstly buying land and developing it. Money doesn't grow on trees, so you need take out loan, and pay inflation standard interests to do that. This is while you weather lay off risks, and other deprecation costs. At this point in time, in any major city in India, you need 2+ crores to build a decent rental property.

Then come maintenance costs, long term costs of holding the property(Property taxes), holding the risks of encroachment etc.

Secondly your point on taxes on rent is not entirely right. You will be surprised how easy it is to attract audit and raids. It happens all the time.

Lastly. In case of renting you have no loan risk, you have no encroachment risk, you have mobility advantage, you can look for newly developed properties and stay there. You can shift every time you find amenities of a different property to be better. All of this in a pay-as-you-go model.

> Almost any economy where buying is expensive, renting works out cheaper.

Cheaper than buying. In the short term, maybe.

You make property ownership look like slavery while renters seem to be just enjoying the ride.

If it is so hard and unrewarding to build rental properties it seems landlords are just addicted to losing money.

That's a decision for you to make.

Different people like to look at the situation differently. I gave you a perspective on buying a home.

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