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You can own as many properties as you want
The difference between a leasehold property and a freehold property lies in its ownership. In a leasehold property, the ownership remains with the concerned local authority or the government (as the case may be). The lease period varies typically between 30 to 99 years. But, this does not prevent the individual owner from selling or performing other transactions with the property, provided the lease deed is registered. In case of a freehold property, the owner of the property is the legal owner and can sell/lease/rent the property as per his/her wish.
The property could be converted from leasehold to freehold if the local law allows it. For example, properties under DDA can be converted to freehold by executing a Conveyance deed but the same is not allowed if the property is owned by the Noida Authority.
A buyer needs to pay the following taxes:
There are a few exemptions available for long term Capital Gains; Buy or construct a new house: If you build a new house or buy one from the money you received 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: To save tax, you can also invest upto 50 lakhs in financial assets or bonds. 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.
If a 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. Such tax needs to be paid 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%.
Property is considered a capital asset, hence, a Capital gains Tax is levied on the gains arising from the sale of property. Such gains are calculated after adjusting the inflation rate, transferring and renovation charges.
In 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 Registration Act, 1908. Once a property is registered lawfully, it means that the person in who is in favor 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 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 of the 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.
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. First, 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.
Yes, you can execute Special Power of Attorney and get your property registered by someone else.
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 ₹ 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 one self-occupied property.
Yes. Generally, the stamp duty on the gift deed ranges from 5% to 12 % in all states. In few states like Haryana, Rajasthan and Delhi, concession of 1 to 2 percent is given to female transferor.
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 of personal possessions.
Home insurance policies cover the house structure as well as contents or possessions. Many insurance policies also combine various personal insurance features too.
Under personal possessions, home insurance companies generally cover furniture, electronic/electrical gadgets and jewelries. However, the maximum liability of these items depends upon the type of insurance cover sought or valuations done by the bank.
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 banks.
It varies from bank to bank. Generally most policies cover a period of five years.
Yes. Filling an FIR is compulsory when insurance is claimed for malicious damages, riots, terrorism, burglary, theft and larceny. In case of a fire incident, you need to submit the assessment report compiled by the fire department as well.
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.
It depends from one bank to another. Some banks ask 1-2 guarantors.
Yes, lending institutions allow you to prepay your loan. However, these institutions may charge early repayment penalties, which may vary from 2% to 3% of the outstanding principal amount.
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 such case, 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.
Yes, a single woman can get a loan. Many lending institutions also have special schemes for them, such as a discount up to 25% on the interest rate.
Generally, banking finance institutions pay around 75-85% of the cost of the property being purchased. The remaining amount is paid up front by the purchaser, 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 on both the loans. However, the total amount should not exceed ₹1,50,000/- for both the houses.
As per Section 80C of the Income Tax Act, you are allowed a separate deductions on principal amount and on the interest amount of home loan, along with other entities like ULIP, PF, PPF, ELSS and NSCs. In case of principal, you can claim deduction up to ₹ 1.5 lakhs while in case of interest, it is ₹ 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.
In fixed 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 balance. In some cases, daily reducing method is also adopted.
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.
The general eligibility conditions are as follows:
Yes. One can avail a pre-approved loan from a housing financial institution or a bank.
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.
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.
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.
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 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 Extensions Loan: Home Extension loans are offered for expanding or extending an existing house. For example, addition of an extra room, a floor etc. -Land Purchase Loan: This type of loan is granted for 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.
Home Loan is the money borrowed from a bank or a housing finance institution on interest for buying/constructing/upgrading a residential real estate property.
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.
Market value means the price at which a property could be bought in the open market on the date of execution of such instrument. The Stamp Duty is payable on the agreement value of the property or the market value whichever is higher.
The instruments Agreement are as under: -Conveyance Deed -Exchange of property -Gift Deed -Partition Deed -Power Of Attorney, -Settlement Deed and Transfer of Lease (This attract Stamp Duty on market value of the property).
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.
Though this seems like an easy question, it has a couple of factors to contribute in. Keep in mind that much more goes into the market value of a house than its square footage. For example, two houses next door to each other can have the same square footage, but one can have 2 bathrooms while the other can have 1 bathroom. So the previous will cost you more.
This break up is extremely essential to know the true sq feet valuation of the property. Builders can place the ratio of 65% to 85% of the super built up area as a carpet area which means, if the price is quoted as 1000 sq ft super built up area, the carpet area could be anywhere from just 650 sq ft to 850 sq ft. Kindly ask for such break up in the agreement / sale deed if it is not mentioned.
The Floor Area Ratio (FAR) or Floor Space Index (FSI) is the ratio of the total floor area of buildings on a certain location to the size of the land of that location, or the limit imposed on such a ratio. As a formula: Floor Area Ratio = (Total covered area on all floors of all buildings on a certain plot) / ( Area of the plot) . Thus, an FSI of 2.0 would indicate that the total floor area of a building is two times the gross area of the plot on which it is constructed, as would be in a multiple-storey building.
The common expenses will include the amounts to be payable by the Society or Association. It includes expense of administration, maintenance, repair or replacement of common areas and facilities. Method of calculating maintenance fee varies depending on the agreement or by-laws of association. There are different procedures or methods adopted by association or society for collecting monthly maintenance fee. Some of the important practices that are prevalent are as follows. -Flat Monthly fee: Under flat monthly fee, society calculates sum or total maintenance charge and divides equally among all flat owners. In apartment, there may be flats with different sizes. Under this system irrespective of size of the flat, all flat owners will be paying equal maintenance fee. This system is generally followed where apartments are of the same size(Sq Ft) -Per Square Feet Rate: Variable rate would be depending on square feet of each apartment or flat. Under this method, rate or fee varies depending on square feet owned by apartment owners. Larger the square feet owned, higher will be monthly maintenance fee. This is widely practiced in Apartment societies with different sizes of apartments. -Partial Flat Rate:Under this will charged fixed rate and for method, association or society charges flat rete for a limit square feet and each additional unit will be charged extra. For e.g.: Flat owners who owns up to 100 sq ft will be charged extra 2 percent. In this case, all flat owners of 1100 sq ft , 1200 sqft and 1500 sq ft pay different amount towards monthly maintenance fee. -Mixed Approach: It is a central approach to the maintenance charging that is normally followed in apartment societies with variable sized apartments. Here, maintenance is charged per square feet, which is generally low and in addition, all expenses are divided equally among the flats.
There are certain fixed costs such as stamp duty, registration, property tax, service tax. Etc, that need to be considered. Also, there are other costs that vary from developer to developer. The most common costs that are not taken in to account are stamp duty and registration charges, floor rise, and the maintenance cost per sq ft. Also, since most houses in India are bought through home loans, flat buyers should also take in to account the cost of an insurance policy to cover the home loan. Right from your fancy lobby to your elevator to the kid’s pool, every square foot gets added to your bill under the common area head. The logic a developer gives is that a home owner uses these facilities as much as his/her own house.
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