You can own as many properties as you want.
It refers to the registering of documents relating to transfer, sale, lease or any other form of disposal of an immovable property. Registration is compulsory by law for all properties under Section 17 of Indian Registrations Act, 1908. Once a property is registered lawfully, it means that the person in whose favor the property is registered is the lawful owner of the premises and is fully responsible for it in all respects.
Registration of a property includes necessary stamping and paying of registration charges for a sale deed and getting it recorded at the sub-registrar’s office of the concerned jurisdictional area. If a property is purchased from a developer directly, getting it registered amounts to act of legal conveyance. In case the purchased property is a second or third transaction, it involves a duly stamped and registered transfer deed. Nowadays, property registration process is computerized in most states.
The language of the registration document must be the one that is commonly used in your district. According to Section 19 of the Indian Registration Act, the Registering Officer or the registrar has the power to decline registration of your document if it is presented in a language which is not commonly used in the district unless it is accompanied with a true translation of the language in use.
Yes, you can execute Special Power Of Attorney to get your property registered by someone else.
Power of Attorney allows a person to authorize another person, the right to make decisions regarding the person’s assets, finances and real estate properties.
There are two types of power of attorney. The first one is the ‘General Power of Attorney’, where a property owner confers ‘general’ rights. The rights include but are not limited to sell, lease, sub-lease etc. The second one is the ‘Special Power of Attorney’ where only a specific right is given by the owner to the chosen person.
The buyer needs to pay the following taxes:
TDS or tax deduction at source on the amount exceeding Rs 50 lakhs for the purchase of property excluding agricultural land.
Stamp duty
Service Tax – Applicable if the property is being purchased from the builder who conceived and constructed the project before offering possession to the buyer. If a ‘ready-to-move-in’ property is purchased from the seller, service tax is not applicable.
Value Added Tax (VAT) – If applicable in the concerned state.
TDS- 1% on immovable properties (except agricultural land) exceeding Rs 50 lakhs.
Stamp Duty – Depending on state and municipal laws
GST-12% and Wokers welfare cess 1%
Stamp Duty is the tax paid for the legal recognition of property. It is paid by the home buyers. You can claim tax incentives of up to Rs 1.5 lakh on stamp duty and registration charges on a new property purchase or construction of a house. However, these benefits are available for only one self-occupied property.
The current stamp duty rate for gift, partition, settlement and release deed is Rs.1000/-. These rates will be revised and these documents will be charged a stamp duty of minimum Rs.1000/- or 0.25% of sale value, whichever is higher.
Property is considered a capital asset and Capital Gains Tax is levied on the gains arising from the sale of the property. Such gains are calculated by adjusting the inflation rate, transfer and renovation charges.
If the house is held for less than three years prior to its sale, it is termed as a short-term capital asset and any gain arising from the sale is treated as a short-term Capital Gain. There are no tax exemptions for short-term Capital Gains and one needs to pay it according to the applicable tax slab.
However, if the property is sold after holding it for more than three years, it is treated as a long-term capital asset and the gain arising from it is called the long-term Capital Gain. Such gains attract a flat exemption rate of 20%.
There are a few exemptions available for long-term Capital Gains if you:
Buy or construct a new house- If you build a new house or buy one from the money you receive from selling a property, you are exempted from paying the tax on Capital Gains. However, the new purchase should be done either one year before or within two years of sale and the construction should be completed within three years from the date of transfer. The new property bought or constructed should not be sold within three years from the date of its purchase or date of 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 brought within six months of transferring the property. You can invest a maximum of Rs 50 lakhs through these bonds.
Original copies of the chain of title agreements and Building Plan approvals
Original registration and stamp duty receipts
Possession Letter
Original share certificate (In case of societies)
Proof of payment of all dues like maintenance charges, electricity bills, phone, water and property taxes up to the date of handing possession
NOC from the Society or other concerned body confirming no objection to the transfer
Projects approvals can be verified by the corporation or the sanctioning authority’s office Ownership documents can be confirmed from the Sub Registrar’s office where they are registered Share certificate related to societies can be verified from the concerned Society itself
Clear and Marketable Title, Sale Deed, Encumbrance Certificate, latest tax receipts, Occupancy Certificate, Building Plan Approvals and Possession Certificate.
New Sale Deed, PAN Card, Photographs.
Sale Deed, No Objection Certificate (NOC) from the builder, NOC from banks, Building Plan approvals, Completion Certificate, PAN Card, and Photographs.
Allotment papers of the plot, Building Plan approvals, Transfer Deed (in case of multiple owners), Sale Deed, PAN Card, and Photographs.
Home insurance is a type of insurance policy that covers private residences and protects them from unpredictable damages, natural or man-made disasters, burglary, and theft.
Home insurance policies cover the house structure as well as its contents or possessions. Many insurance policies also combine various personal insurance features too.
It varies from bank to bank. Generally, most policies cover a period of five years.
Property valuation is done by multiplying the built-up area of the property with the cost of construction per square feet. This is the usual method followed by most of the banks.
Under personal possessions, home insurance companies generally cover furniture, electronic/electrical gadgets and jewelry under personal possessions. However, the maximum liability of these items depends upon the type of insurance cover sought or valuations done by the bank.
Home loan is the money borrowed from a bank or a housing finance institution of interest for buying/ constructing/upgrading a residential real estate property.
The general eligibility conditions are as follows:
The borrower should be a resident of India or an NRI
Above 24 years of age at the beginning of the loan
Below 60 years (65 for self-employed) or retirement age when the loan matures
The banks usually offer these nine types of loans on interest:
Home Purchase Loan: It is the most common type of loan taken for purchasing a new residential property or an old house from its previous owner.
Home Improvement Loan: Home improvement loans are given for executing repair and renovation work at home.
Home Construction Loan: These loans are sanctioned to construct a house on a piece of land you have already purchased. The loan approval and application process for these loans is somewhat different from the other commonly available home loans.
Home Extension Loan: Home extension loans are offered for expanding or extending an existing house. For example, the addition of an extra room, a floor etc.
Land Purchase Loan: This type of loan is granted for the purchase of a plot of land for both residential or investment purposes.
Home Conversion Loans: These loans are available for people who have already purchased a house by taking a home loan but now want to buy and move to another house. With these loans, they can fund the purchase of the new house by transferring the current loan to the new house.
Balance Transfer Loan: These loans are availed to transfer one’s home loan from one bank to another. It is usually done to repay the remaining amount of loan at lower interest rates or when a customer is unhappy with the services provided by his existing home loan provider and wants to switch to a different bank.
NRI Home loans: These are specialized loans, structured to suit the requirements of NRIs who wish to build or buy a home in India.
Loan against Property (LAP): These loans are given or disbursed against the mortgage of a property.
You have to submit the following documents:
Proof of Identity: PAN, Driving license, Voter ID, Aadhar Card
Proof of Income:
Salaried Applicants: Latest 3 Months salary slip showing all deductions and Form 16 for the last three years.
Self Employed Applicants: IT returns for the past 2 years and computation of income for the last 2 years as certified by a CA
Bank Statement: Past 6 months
Guarantor Form (Optional)
As home loans cover a large sum, the tenure generally varies between 3 to 30 years.
Longer the tenure you have, the lesser will be your EMI but higher would be the interest outgo. In shorter tenures, you pay a greater EMI, but the loan gets repaid faster and you pay less interest.
Apart from other criteria and norms of the lending bank, the home loan amount is generally calculated as 30 to 65 percent of your gross income. You can increase your loan amount by including a co-applicant.
Yes. One can avail a pre-approved loan from a housing finance institution or a bank.
Yes, lending institutions allow you to repay your loan.
It depends from one bank to another. Some banks ask for 1-2 guarantors
Yes, a single woman can get a loan. Many lending institutions also have special schemes for them, such as a discount of up to 0.25% on the interest rate.
It is generally advantageous to go for a home loan as it helps you in availing tax benefits. However, please consult your CA or tax advisor to discuss the advantages and disadvantages in your case.
In a majority of the cases, the property to be purchased itself becomes the security and is mortgaged to the lender till the entire loan is repaid. A number of lenders may ask for additional security such as life insurance policies, Fixed Deposit receipts and savings certificates.
Yes, you can sell the property with the consent of the banking institution.
If the buyer wants to take a loan to buy the property, the process is much easier if he approaches the same bank. In these cases, the bank does not need to release the property papers to another bank before getting the payment.
If the buyer wants to make a payment outright, he can make it to the bank directly. The property papers will be released only after the bank has recovered the entire loan amount.
Generally, banking financial institutions pay around 75 to 85 percent of the cost of the property bought. The remaining 20 % of the amount is paid up front, which is popularly known as the down payment.
On an average, loans are disbursed within 3-15 days after satisfactory and complete documentation and completion of required procedures.
Yes, you can get the benefit of both loans. However, the total amount that you will be entitled to will not exceed Rs 1,50,000 for both the homes.
As per Section 80C of the Income Tax Act, you are allowed separate deductions on principal and interest amount of home loan amount, along with other entities like ULIP, PF, PPF, ELSS, and NSC’s. In case of principal, you can claim deduction up to Rs 1.5 lakhs while in case of interest, it is Rs 2 lakhs. The amount of stamp duty and registration is also eligible for tax deduction.
It is important to note that the tax break can only be claimed for the year in which the construction is completed.
Home loans are usually accompanied by the following extra costs:
Processing Charge: It is the fee payable to the lender on applying for a loan. It is either a fixed amount not linked to the loan amount or a percentage of the loan amount.
Miscellaneous Costs: Some lenders may also ask for documentation or consultation charges.
In fixed interest rate, the interest remains constant throughout the loan period irrespective of the changes in market conditions while in the floating interest rate, the interest can decrease or increase depending on market fluctuations.
The interest on home loans is usually calculated either on monthly reducing or yearly reducing the balance. In some cases, a daily reducing method is also adopted.
Annual reducing: In this system, the principal, for which you pay interest, reduces at the end of the year. Thus, you continue to pay interest on a certain portion of the principle that you have actually paid back to the lender. This means that the EMI for the monthly reducing system is effectively less than the annual reducing system.
Monthly reducing: In this system, the principal, for which you pay interest, reduces every month as you pay your EMI.
Daily Reducing: In this system, the principal, for which you pay interest, reduces from the day you pay your EMI. EMI in the daily reducing system is less than the monthly reducing system
EMI or Equated Monthly Instalment is a fixed amount paid by you to the bank on a specific date every month. The EMIs are fixed when you borrow money from the bank as a loan. EMI’s are used to pay both interest and principal amount of a loan in a way that over a specific number of years, the loan amount is repaid to the bank with interest.
Under the Pre-EMI option, the borrower is required to pay only the interest on the loan amount that will be disbursed as per the progress on construction of the project. The actual EMI payment starts after the possession of the house.
