What are the taxes you
have to pay while purchasing property?
If you are buying a new property, you
have to pay Service Tax, VAT and Stamp Duty on the total amount of purchase. If
you buy re-sale property, then you do not have to pay any of these taxes
When is the transaction
of sale considered complete?
The transaction of sale is considered
complete when either the possession is given or Conveyance Deed is registered
When are capital gains
applicable and how can capital gain tax be saved / reduces ?
Capital gain is applicable
when: The sold property has been withheld by a person for a period of more
than three years from the date of purchase / possession.
The sale proceeds
are invested in a residential property which is bought one year before the sale
of property or two years after the sale of first property.
property is bought after the sale of the first propety. Capital Gains Tax
can also be saved by investing the sale proceeds in Capital Gain Bonds.
DOCUMENTS1. What documents and formalities are required while buying
Documents required while buying property are Identity Proof like
Voters' ID Card, Passport, Driving License, Ration Card and Pan Card.
careful of the Sale Deed/Agreement and also check that the complete property
chain is mentioned in the Deed.
2. Things you should check at
the time of signing the agreement?Here are the important things to check before you sign the
agreement with the developer:
l Specific apartment allotted, tower number
and size Details of area including super area, covered area and carpet
area Costing Date of possession, penalty in case of delay
How do you know that a
project has legal approvals from authorities?
The best way is to check if the banks
are funding the project. Generally, banks approve projects and start
disbursement only after all the approvals are in place.
Ensure that the
documents of Title of the property you intend to purchase are clear. A
defective Title will create problems.
sure that the building has been
constructed as per the sanctioned plan and deviation, if any, is in the allowed
It should not be in a low-lying area or in a filled-up water
Ensure that the developer has clearance certificates from the
Electricity Board, Water and Sewage Board and other concerned
Commencement Certificate and Occupancy Certificate are other
important documents that are necessary while buying property.
Check out the
genuine-ness of the documents with the concerned authorities. Ensure
Agreement for Sale and Sale Deed, duly stamped, executed and registered are in
your possession. Both should contain fair clauses for both the parties.
HOME BUYING GUIDE1.
The Need To Buy
PropertyThe common dilemma that the consumer at
our Open House forum poses is what is the right time to buy? The 'right' time
to buy your house is when you feel that you are ready for the responsibility
that comes along with buying a house. It is important to consider the
objectives of buying a house. Ask yourself why you want that house? What really
is the motivating factor when it comes to your decision to buy that house? Do
you want to buy it because you want to live in it with your family or do you
look for an extra income that the house will bring in the form of rent? Or, are
you simply buying it for long-term value leverage? The more you know about why
you should buy a home, the more focused your search will be and the better you
will be able to select one that meets your requirements.
2. Short Listing Your PropertyOne should buy property in an area which
has adequate basic amenities such as power, water, sewerage, etc.
important to do your checks and balances while deciding on a project.
Infrastructure in the area, connectivity, builder's goodwill and price of the
property are key components a buyer needs to take into consideration.
should also carefully check points such as the builder's experience, number of
projects completed and delivered, banking institutions involved and present buy
options available to suit your requirements.
It is better you conduct a field
survey before identifying a suitable property meeting your budget and location
3. Choosing the Right LocationWhen it comes to choosing a location,
the consumer looks at connectivity and availability of basic urban and social
infrastructure in that area.
Big cities have that advantage.
Land values are
very high in many big cities.
When investing in a big city, keep a few things
If you are purchasing for self use, buy in a neighbourhood that has
all the conveniences that you require and also has good accessibility to the
rest of the city.
Even in premium localities, if you keep searching, you will
find properties that suit your budget. If you cannot afford the premium rates,
look for a locality on the fringes of your area of choice.
This will have all
the advantages of proximity to the main locality but sport lower price tags.
Also, look for property that is being re-developed in city areas.
They will be
new and come with a maintenance free period
.4. How To Choose An AgentIt depends on the property you are
buying and who offers it to you.
In case the seller is a realtor, it is best to
buy through him after doing a background check on his reputation because he
would know what legal checks must be made by you before putting the money on
In case a seller is an individual he must hire the services of a
good lawyer to do a due diligence on title, etc before you write that cheque.
This money spent on due diligence may pinch today and seem unnecessary but in
the long run you will realize that this is a wise decision.
5. Home LoanThe main criteria are:Your income and your track record of
repaying previous loans - this is obtained from the Credit Bureau.
expenses including other loans you are servicing.
The amount of loan related to
the property value.Ownership of the property - this means that the lending bank
should be comfortable that the seller has full and complete ownership of the
property.Getting a loan depends on the report of the local bank surveyor who
will inspect the property and give his recommendation
.6 . Managing FinanceThe real estate market is similar to the stock market, with its
peaks and troughs always seeming to make perfect sense in retrospect. Also,
both markets reflect the economy of the country and offer good investment
opportunities. However, the risks must be understood along with the
opportunities. Realty index will appreciate five times, but not the stock
7. Return on Investment (ROI)Do your complete research on the Web and physical survey of the
projects. Invest in projects which are at least 25-30 per cent complete as this
will be comfortable in terms of approvals. Brokers may sometime offer better
rates than the developer's sales team. Bank approved projects are preferred
since they give comfort in terms of the approvals.
8. Exiting the marketOn what basis should I decide to sell my property?
Your decision to
sell your property depends on the following factors:Property market in your
city/locality : The residential property market is locationspecific and
the prices will vary for different areas.How soon do you need the money? Do not
sell your property in a hurry if you do not need the money urgently. Getting the
best deal may require patience or even spend some money to add value to your
house. You also need to consider the rental return from the property as it will
be a source of steady income.
Price it right The biggest mistake sellers make is in pricing their
property too high. The best way to determine the ideal price for your property
is to check with brokers in the locality or by listing it on property portals
Consider the taxes How much you actually get after you sell the property will
depend on how long you held the investment. If you sell your house within three
years of buying it, you will lose the tax benefits.
In case of a mortgaged property Selling a house that has an outstanding loan requires a lot of
documentation. So, try to pay the loan and then sell the house.
How do I sell my property?Selling property is much more difficult than buying one. Unless
you know of people who are willing to give a good price for your house, a
property broker may be your best bet. Brokers usually have a wider reach and
are more clued in to the local property market than an individual seller.
can also list your property online. Property portals such as LIVE2HOME.com
allow individual sellers to list one property for free. It is also worth listing
as a nominally paid service as the portal offers additional services for the
What is considered as the right time to exit a real estate investment?
Real estate is not a ?get rich quick? investment route. It pays
off only when one invests in a property for at least 3-4 years. Even with a
long-term investment horizon, one needs to have a clear exit strategy in mind
before one buys real estate as an investment.
How to make a safe exit from real estate?
Selling the property as fast as possible in challenging market
conditions is a wrong investment strategy. The only safe and consistently
profitable route is long-term investment.
This is why it is extremely important
to know what will happen a few years down the line ? to the property market in
general, the location and property in particular and one?s own finances.
savvy real estate investor must know unrealised gains are meaningless and when
to take money off the table. In the era of internet, finding out the Joint ventures made very
easy. A joint venture is a business agreement in which parties agree to
develop, for a finite time, a new entity and new assets by contributing
A joint venture takes place when two parties come together to take on
one project. In a joint venture, both parties are equally invested in
the project in terms of money, time, and effort to build on the original
While joint ventures are generally small projects, major
corporations also use this method in order to diversify.
A joint venture
can ensure the success of smaller projects for those that are just
starting in the business world or for established corporations.
the cost of starting new projects is generally high, a joint venture
allows both parties to share the burden of the project, as well as the
A joint venture is not to be taken lightly.
For a businessperson to
embark on a joint venture, he or she needs to be committed and willing
to work cooperatively with the other party involved.
A person involved
in a joint venture can no longer make all of the decisions for the
business alone. For it to be truly a "joint venture,? there has to be
100% commitment from both sides