BaseIndia Properties is one of South India’s fast-growing Property Advisory Services Company offering fully integrated real estate services. Here is a set of Frequently Asked Questions related to real estate transactions, and their answers, presented as succinctly as possible. If you do not find an answer you are looking for, you can always post your query on the Contact us page.
Buying/Selling Property
Which documents are to be verified before purchase of a Property?
Before you purchase a property, you have to have a title and document search conducted by a competent advocate. You cannot do it yourself. It is a professional job to be done with professional assistance.
What is the difference between super built up area, built up area and carpet area?
Super Built up Area: This includes the built up area along with the area under common spaces such as the lobby, lifts, stairs, etc. So this term is only applicable in the case of multi-dwelling units.
Built up Area: This is the area of the apartment/building including the area of the walls.
Carpet Area: This is the area of the apartment/building excluding the area of the walls
What are all the important documents one should check before buying an apartment (a flat) ?
You have to verify the approved layout plan, approved building plan, ownership documents, carry out search, etc. , You should get a legal opinion from a competent advocate. Contact a professional agency before you purchase a property so that they can offer better advice on all related matters.
Who is liable to pay Stamp Duty while purchasing a property?
The buyer has to pay the stamp duty, unless there is an agreement to the contrary.
In whose name are the stamps to be purchased?
The stamps are to be purchased in the name of any one of the executors to the deed.
What is the stamp duty on registration?
The stamp duty varies from State to State and from time to time. It is governed by the State Stamp Act.
Who is the appropriate authority for knowing the market value/stamp duty?
The Sub-Registrar of the area, in whose jurisdiction the property is located, is the appropriate authority for knowing the market value of the property.
Can I buy a property/flat through a Power of Attorney (POA)?
Property/flat cannot be purchased on a POA basis, since it is not permitted under the law of the land.
Is a POA revocable?
POA can be either revocable or irrevocable, depending on what sort of a POA one has made.
What is meant by a ‘Free Hold property’?
‘A freehold property’ is one in which the ownership is full and unconditional and there is no lessor / lessee.
Do we have any agencies which can provide a hassle-free purchase of property?
Comprehensive services in the real estate sector are provided by several brokers in various cities of India. You can find this out from various property sites. You can also engage BaseIndia Properties for your services.
A property/flat is to be gifted. What are the legal formalities? What about stamp duty?
Gift of an immovable property is considered as a ‘transfer’ under the provisions of the TOP Act and you have to have the transaction registered through a Gift Deed and pay stamp duty as per provisions of the relevant Stamp Act depending on which State the property is situated in.
What are the permissions and papers that one should check while buying a flat under construction from a builder?
While buying a flat under construction from a builder, one should check the following:
1. Approved plan of the building along with the number of floors to ensure that the floor that you are buying is approved.
2. Check the title of the land on which the development is undertaken with the help of an advocate.
3. Check if the land on which building is built is owned by the builder or is undertaken by an agreement with a landlord.
4. Check the building byelaws / development rules applicable to that area and ensure that the builder is building without any violation of rules such as front setback, side setbacks, height, etc.
5. Check if specifications given in the agreement to sell match with that of the approved plan.
6. Ensure that urban land ceiling NOC (if applicable) has been obtained or not, in States where it is applicable.
7. Check if NOC from water and electricity authorities, fire & safety department, etc. are available
8. Check the reputation of the builder.
How is the market rent determined?
There is no prescribed manner for determining market rent, but prevailing rates can be easily found out by approaching a reputed agent/consultant.
What is the procedure for vacating a tenant? What is the notice period required?
Normal procedure is to send a notice to the tenant, failing which a court case may be filed which usually takes 10 to 20 years to reach a verdict
Housing Loans
How much housing loan can one avail of?
Housing loan will be sanctioned depending on one’s repayment capacity and income. Spouse’s income can also be included, for a larger amount of loan. The maximum loan that can be sanctioned varies with housing finance companies and ranges from Rs.10 lakh to Rs. 1 crore.
What are the tax benefits that are available if one avails of a housing loan ?
Tax benefits are available on both the principal and interest components of the loan as per the Income Tax Act. The upper limit of the amount of deduction of interest repayment allowed from your gross total income is now Rs. 1,50,000 p.a.. Besides, Sec. 88 offers tax benefits for principal repayments. The principal repayment amount is included in the overall limit of Rs 1,00,000/-
What is reducing balance?
Reducing balance is the method of reducing the principal amount already paid, from the outstanding loan amount. Every time you make a payment, the interest outstanding up to the date of payment is adjusted from that payment and balance adjusted against the principal.
Which loan is cheaper: the monthly reducing balance or the annual reducing balance?
The best way is to compare the EMIs and the tenures of the two home loans. The loan carrying the lower EMI for the same tenure is the cheaper option.
What is a fixed rate home loan?
A fixed rate home loan is a loan where the interest rate is constant over the entire tenure of the loan.
What is a floating interest rate?
A floating interest rate loan is a loan where the interest rate payable is linked to the market rate like the bank lending rate. As the bank rate varies, the interest rate payable will also rise and fall. The loanee have to bear the risk of interest rate fluctuations, the floating interest rates offered are slightly lower than the fixed interest rates.
What is a Home Extension Loan?
A loan which helps you to meet the expenses of any alteration like extension/expansion or modification of your home is a home extension loan. You can avail of a home extension loan, after obtaining the requisite approvals from the municipal corporation.
Tax Related Matters
Does one have to obtain any permission from the Income Tax authorities for purchase of an immovable property?
No permission is required from the Income Tax authorities for purchase of an immovable property.
Is there any special incentive available for purchase of residential property by obtaining finance from banks or from financial institutions?
Under Section 88 of the Income Tax Act, you can claim benefit for the principal repayment. Interest on loan is deductible under Section 24 from income from House Property.
Are the benefits attached to purchase of residential properties also applicable to commercial properties?
No such benefits are available for purchase of commercial properties.
What are the tax implications of sale of any house property, commercial or residential?
You are liable to pay Tax on profit arising from sale of a house property under the head Capital Gain.
Whether incidental charges like brokerage, registration fees, stamp duty and other charges arising out of sale of house property deductible from profit arising on sale ?
These expenses are allowable expenses from the full value of consideration of the sale of house property.
Is there any provision by which exemption from tax on capital gains can be claimed ?
The Income Tax Act has provisions under Section 54 & 54A G whereby one can claim exemption from tax on capital gains.
Is the interest on the loan availed for construction of a commercial building deductible for arriving Income Tax?
Yes. The interest on loan availed for construction of a commercial building is deductible while arriving Income Tax.
Is Service tax applicable for commercial and residential constructions?
Yes. Service Tax is applicable to commercial and flats developed for sale. The applicability of tax is based on the total built up area.
What are the tax components that have to be budgeted for a commercial building construction?
There are several taxes associated with a commercial building development. They are mainly municipal tax, one time revenue tax, VAT, service tax, CST, labour welfare cess, etc.. Most of these taxes differ from State to State. Consult a competent professional agency before starting the project for better cost planning.
Ask the Experts
If you have any specific query related to real estate topics, you may submit it to our panel of experts by stating your query in the box provided in the Contact page of this website.
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