Buyers Point FAQs

  1. How many properties can I own or buy?
  • You have the option of owning as many properties as you wish.
  1. How can I qualify for exemptions on the capital gains tax?
  • Buying or building a new house: If you purchase or build a new house using the proceeds from the sale of an existing property, you are free from paying Capital Gains tax. However, the new acquisition must be made one year before or within two years of the sale, and the construction must be finished within three years of the transfer date. The new property purchased or built should not be sold within three years of the date of purchase or completion of construction.
  • Capital Gain Account Scheme: Through the Capital Gain Account Scheme (CGAS), you can save the received money in designated banks. CGAS helps you in buying time to look for suitable investments as it serves to inform the Income Tax department that you plan to invest the money received; but at a later date.
  • Invest in Bonds: You can also invest in financial assets or bonds to save tax. Such bonds are issued by the Rural Electrification Corporation and the National Highway Authority of India and should be bought within six months of transferring the property. You can invest a maximum of Rs 50 lakhs through these bonds.
  1. What is the difference between long-term capital gains and short-term gains?
  • If you own a property for less than three years before selling it, it is considered a short-term capital asset, and any profit from the sale is considered a short-term capital gain. There are no tax breaks for short-term capital gains, and they must be paid according to the appropriate tax bracket.
  • If the property is sold after more than three years, it is considered as a long-term capital asset, and the gain is referred to as the long-term Capital Gain. Such profits are subject to a flat exemption rate of 20%.
  1. What are capital gains on property purchase?
  • Property is classified as a capital asset, and capital gains tax is imposed on gains derived from the sale of property. These gains are computed after correcting for inflation, transfer, and renovation fees.
  1. Do I need to pay stamp duty if the property is transferred or is a gift
  • Yes. In general, the stamp duty on the gift deed ranges from 5% to 12% in all states. Female transferors receive a 1% to 2% tax break in a few states, including Haryana, Rajasthan, and Delhi.
  1. What is stamp duty? Who is liable to pay stamp duty? Do I get tax benefits on stamp duty?
  • The tax paid for the legal acknowledgment of property is known as stamp duty. It is borne by the purchasers of real estate. On a new property acquisition or house building, you can claim tax breaks of up to Rs 1.5 lakh on stamp duty and registration fees. These benefits, however, are only available for one self-occupied home.
  1. What are the current rates for the different property taxes that need to be paid?
  • TDS- 1% on immovable properties (excluding agricultural land) worth more than Rs 50 lakhs.
  • Stamp duty varies according to state and municipal laws.
  • Service Fee- This is a centralised tax paid by you for the services provided by the developer. From April 1, 2015, the service tax is 14 percent on vehicle parking and preferred location costs (PLC) and 3.50 percent on the basic sale price if the flat is valued less than Rs 1 crore or has a floor size less than 2000 sq ft. If the apartment is valued more than Rs 1 crore or has a floor space more than 2000 sq ft, the service tax is 14 percent on vehicle parking and preferred location costs (PLC) and 4.2 percent on the flat’s basic sale price.
  1. What are the taxes that I need to pay before buying a property?
  • TDS, or tax deduction at source, is levied on amounts above Rs 50 lakhs for the acquisition of real estate other than agricultural land.
  • Stamp duty Service Tax – Applies if the property is acquired from the builder who designed and built the project before handing over ownership to the buyer. Service tax is not applicable if a ready-to-move-in home is acquired from the vendor.
  • VAT (Value Added Tax) – If applicable in the relevant state.
  1. How can I convert a leasehold property to freehold?
  • If the local rules allow it, the property might be changed from leasehold to freehold. Properties under DDA, for example, can be changed to freehold by completing a Conveyance Deed, but this is not permitted if the property is controlled by the Noida Authority.
  1. What is the difference between leasehold property and freehold property?
  • The ownership of a leased property differs from that of a freehold property. The ownership of a leased property stays with the concerned local body or government (as the case may be). The lease term generally ranges from 30 to 99 years. However, as long as the lease deed is recorded, the individual owner is free to sell or conduct other transactions with the property.
  • In the case of a freehold property, the owner is the legal owner and can sell/lease/rent the property as he or she sees fit.
  1. What should be the language of the registration document?
  • The registration paperwork must be written in the language that is frequently used in your region. According to Section 19 of the Indian Registration Act, the Registering Officer or Registrar has the authority to refuse registration of your document if it is submitted in a language that is not frequently used in the district, unless accompanied by a genuine translation of the language in use.
  1. Can I authorize someone else to register my property by granting him power of attorney?
  • Yes, you can execute Special Power Of Attorney to get your property registered by someone else.
  1. What is power of attorney?
  • A power of attorney gives another person the authority to make decisions about a person’s assets, finances, and real estate properties.
  • Powers of attorney are classified into two categories. First, there is the ‘General Power of Attorney,’ in which a property owner grants ‘general’ authority. The rights include, but are not limited to, the ability to sell, lease, sublease, and so on. The second type is the ‘Special Power of Attorney,’ in which the owner grants the designated individual only a specified right.
  1. How can I register my property?
  • Registration of a property entails stamping and paying registration fees for a sale deed, as well as having it recorded at the sub-office registrar’s of the relevant jurisdictional area. If a property is purchased directly from a developer, registering it is an act of legal conveyance. In the case of a second or third transaction, a fully stamped and registered transfer deed is required. In most states, the property registration procedure is now automated.
  1. What is property registration?
  • It is the registration of documents pertaining to the transfer, sale, lease, or other form of disposal of an immovable property. Section 17 of the Indian Registrations Act of 1908 requires all properties to be registered. When a property is properly registered, it implies that the person in whose favour the property is registered is the legitimate owner of the premises and is completely accountable for it in all ways.
  1. What documents would I need at the time of possession?
  • Original documents of title agreements and Building Plan approvals
  • Receipts for original registration and stamp duty
  • Original share certificate Possession letter (In case of societies)
  • Proof of payment of all dues, such as maintenance fees, energy bills, phone bills, water bills, and property taxes, up to the date of receiving the NOC from the Society or other responsible authority certifying no objection to the transfer.
  1. How could I verify the documents shown to me by the seller are genuine?
  • The corporation’s or the sanctioning authority’s office can confirm project approvals.
  • The Sub Registrar’s office, where the documents are recorded, can confirm ownership.
  • Share certificates for societies can be confirmed with the Society in question.
  1. What documents do I need to check If I am buying a resale property?
  • A clear and marketable title, a sale deed, an encumbrance certificate, the most recent tax receipts, an occupancy certificate, building plan approvals, and a possession certificate are all required.
  1. What documents are required to get a resale property registered?
  • Photographs, a new sale deed, and a PAN card
  1. What documents are required for registration of a new apartment/plot?
  • Sale Deed, No Objection Certificate (NOC) from builder, NOC from banks, Building Plan Approvals, Completion Certificate, PAN Card, and Photographs
  1. What documents are needed for registration of an independent house?
  • Plot allotment documents, Building Plan approvals, Transfer Deed (in case of multiple owners), Sale Deed, PAN Card, and Photographs are all required.
  1. What documents should I check before buying a new property?
  • Approved Building Plans Sale Deed Title Deed
  • Certificate of Completion ( Newly Constructed)
  • Certificate of Completion ( Under-construction property)
  • Certificate of Conversion ( If agricultural land is covered to non-agricultural)
  • Certificate of Khata (especially in Bangalore)
  • Certificate of Encumbrance
  • Recent Tax Receipts
  • Certificate of Occupancy
  1. Is an FIR necessary while making the claims?
  • Yes. In instances when insurance is sought for malicious damages, rioting, terrorism, burglary, theft, and larceny, a FIR is required. In the event of a fire, you must also submit the assessment report produced by the fire service.
  1. How do banks evaluate the property for insurance?
  • Property valuation is calculated by multiplying the property’s built-up area by the cost of construction per square foot. This is the standard approach used by most banks.
  1. What is generally the tenure of a home insurance?
  • It differs from one bank to the next. Most insurance is valid for a duration of five years.
  1. What is covered under personal possessions?
  • Furniture, electronic/electrical devices, and jewellery are often covered under personal goods by house insurance providers. The maximum liability of these goods, however, is determined by the type of insurance coverage obtained or assessments performed by the bank.
  1. What does a home insurance policy cover?
  • Home insurance plans cover both the structure of the house and its contents or assets. Many insurance packages also include a variety of personal insurance features.
  1. What is home insurance?
  • Home insurance is a form of insurance coverage that protects private dwellings from unforeseeable damages such as natural or man-made disasters, burglary, and theft.
  1. Can I repay the loan ahead of schedule?
  • Yes, lending organisations allow you to pay off your loan ahead of time. However, these banks may levy early repayment penalties ranging from 2% to 3% of the outstanding principal amount.
  1. Do I need a guarantor to get a home loan?
  • It differs from one bank to the next. Some banks want 1-2 guarantors.
  1. If I have money, is it still necessary to avail of a bank loan for buying a home?
  • A house loan is typically favourable since it allows you to take advantage of tax breaks. However, please consult your CPA or tax expert to explore the benefits and drawbacks in your specific situation.
  1. Do I need to furnish any security to get a home loan?
  • In most situations, the property to be acquired serves as security and is mortgaged to the lender until the whole amount is returned. Several lenders may need extra collateral, such as life insurance plans, Fixed Deposit receipts, and savings certificates.
  1. Can I sell the property, even when the home loan is outstanding?
  • Yes, you can sell the property with the approval of the bank.
  • If the buyer want to obtain a loan to purchase the home, he should approach the same bank. In certain circumstances, the bank is not required to deliver the property documents to another bank before receiving payment.
  • If the buyer wishes to pay in full, he may do so straight to the bank. Only once the bank has collected the whole loan amount will the property documents be issued.
  1. Can a single woman get a loan?
  • Yes, a loan may be obtained by a single lady. Many lending banks also offer specific programmes for them, such as interest rate discounts of up to 0.25 percent.
  1. What is a down payment?
  • Banking financial institutions often pay 75 to 85 percent of the cost of the property purchased. The remaining 20% is paid in advance and is sometimes referred to as the down payment.
  1. What is the time required for home loan disbursement?
  • Loans are typically disbursed within 3-15 days of receiving adequate and full documents and completing all necessary processes.
  1. I have two housing loans on two different properties. Can I get a tax rebate for both the loans?
  • Yes, you can profit from both loans. However, the total sum you would be entitled to purchase both properties will not exceed Rs 1,50,000.
  1. How much tax rebate is available on a home loan?
  • According to Section 80C of the Income Tax Act, you are permitted separate deductions on the principle and interest amount of your house loan, as well as other entities such as ULIP, PF, PPF, ELSS, and NSC’s. In the event of principal, you can claim a deduction of up to Rs 1.5 lakhs, while in the case of interest, you can claim a deduction of up to Rs 2 lakhs. The sum of stamp duty and registration is also tax deductible.
  • It should be noted that the tax credit may only be claimed for the year in which the work is finished.
  1. Are there any other charges that accompany home loans?
  • The processing charge is the cost paid to the lender when you apply for a loan. It is either a set sum that is unrelated to the loan amount or a percentage of the loan amount.
  • Pre-payment Penalty: When a loan is returned early, some banks levy a penalty known as the pre-payment penalty.
  • Costs of Miscellaneous Items: Documentation or consulting fees may also be requested by some lenders.
  1. What is the difference between fixed rate and floating rate of interest?
  • The interest rate in a fixed interest rate remains constant during the loan duration regardless of changes in market circumstances, whereas the interest rate in a floating interest rate might fall or rise based on market movements.
  1. How is the interest rate calculated?
  • The interest on home loans is usually calculated either on monthly reducing or yearly reducing balance. In some cases, daily reducing method is also adopted.
  • Annual reducing: In this arrangement, the principle on which interest is paid decreases at the end of the year. As a result, you continue to pay interest on a part of the principle that you have really repaid to the lender. This indicates that the monthly decreasing system has a lower EMI than the annual reducing method.
  • Monthly reducing: In this method, when you pay your EMI, the principle on which you pay interest is reduced each month.
  • Daily Reducing: In this arrangement, the principle on which you pay interest is reduced on a daily basis beginning with the day you pay your EMI. The EMI in the daily lowering method is lower than the EMI in the monthly reducing system.
  1. What are the documents needed to apply for a home loan?
  • PAN, driving licence, voter ID, and Aadhar Card are all acceptable forms of identification.
  • Income Documentation:

Applicants with a salary: The most recent three months’ salary slip, including all deductions, as well as Form 16 for the previous three years.

  • Self-Employed Applicants: IT returns for the previous two years, as verified by a CA Bank, and income computation for the last two years Statement for the last six months
  • Form of Guarantor (Optional)
  1. How does my salary influence my home loan amount?
  • Aside from the lending bank’s other requirements and standards, the house loan amount is often computed as 30 to 65 percent of your gross income. You can raise the amount of your loan by adding a co-applicant.
  1. What are the general eligibility conditions for availing a home loan?
  • The borrower must be an Indian citizen or an NRI.
  • At the start of the loan, you must be over the age of 24.
  • When the loan matures, you must be under the age of 60 (65 if self-employed) or retire.
  1. Can a home loan be pre-approved?
  • Yes. A pre-approved loan can be obtained through a housing financial organisation or a bank.
  1. What is pre-emi?
  • Under the Pre-EMI option, the borrower is only needed to pay the interest on the loan amount, which will be distributed based on the project’s development. The actual EMI payment begins when the residence is taken ownership of.
  1. What is an EMI?
  • EMI, or Equated Monthly Installment, is a predetermined sum paid to the bank on a monthly basis. When you take out a loan from a bank, the EMIs are fixed. EMIs are used to pay both the interest and the principle amount of a loan in such a manner that the loan amount is repaid to the bank with interest over a certain period of years.
  1. Does tenure affect the loan cost?
  • The longer your term, the lower your EMI but the greater your interest outgo. Shorter loan terms require a higher EMI, but the loan is returned sooner and with less interest.
  1. What are the types of Home loans available?
  • Home Purchase Loan: This is the most frequent form of loan used to purchase a new or used residential property from the previous owner.
  • House Improvement Loan: Home improvement loans are provided for the purpose of completing home repair and remodelling projects.
  • Home Construction Loan: These loans are approved to build a house on land that you have previously acquired. These loans have a somewhat different loan approval and application process than other frequently accessible house loans.
  • Home Extension Loan: Home extension loans are available for the purpose of expanding or extending an existing home. For example, the addition of an extra room, a floor, and so on.
  • Land Purchase Loan: A loan for the purchase of a parcel of land for either residential or investment reasons.
  • Home Conversion Loans: These loans are offered to those who have already acquired a home with a property loan but now want to buy and move to a different home. They can utilise these loans to support the purchase of a new home by transferring the present loan to the new home.
  • Balance Transfer Loan: These loans are used to transfer a homeowner’s mortgage from one bank to another. It is generally done to settle the remaining loan amount at a reduced interest rate or when a customer is dissatisfied with the services offered by his current home loan provider and want to transfer to a new bank.
  • NRI Property Loans: These are specialty loans designed to meet the needs of NRIs looking to develop or purchase a home in India.
  • Loan against Property (LAP): These loans are provided or disbursed against a property’s mortgage.

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