How many properties can I own?
You can own as many properties as you want.
How can I qualify for exemptions on the Capital Gains Tax?
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 bought within six months of transferring the property. You can invest a maximum of Rs 50 lakhs through these bonds.
What is the difference between long-term Capital Gains and short-term Capital Gains?
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%.
What are Capital Gains on property purchase?
Property is considered a capital asset and Capital Gains Tax is levied on the gains arising from the sale of property. Such gains are calculated after adjusting the inflation rate, transfer and renovation charges.
Do I need to pay stamp duty if the property is transferred or is a gift?
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 per cent is given to female transferors.
What is Stamp Duty? Who is liable to pay Stamp Duty? Do I get tax benefits on Stamp Duty?
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.
What are the current rates for the different property taxes that need to be paid?
- TDS- 1% on immovable properties (except agricultural land) exceeding Rs 50 lakhs.
- Stamp Duty – Depending upon state and municipal laws
Service Tax – It is a central tax paid for the services offered by the developer to you. From April 1, 2015 onwards, if the apartment is worth less than Rs 1 crore, or has a floor area less than 2000 sq ft, the service charge levied is 14% on car parking and preferential location charges (PLC) and 3.50% on the basic sale price. If the apartment is worth over Rs 1 crore, or has a floor area greater than 2000 sq ft, the service tax levied is 14% on car parking and preferential location charges (PLC) and 4.2% on the basic sale price of the flat.
What are the taxes that I need to pay before buying a property?
The buyer needs to pay the following taxes:
TDS or tax deduction at source on amount exceeding Rs 50 lakhs for the purchase of property excluding agricultural land.
What should be the language of the registration document?
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.
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.
What is Power Of Attorney?
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.
How can I register my property?
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.
What is property registration?
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.
What documents would I need at the time of possession?
- 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
How could I verify that the documents shown to me by the seller are genuine?
- Projects approvals can be verified from 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
What documents do I need to check if I am buying a resale property?
Clear and marketable Title, Sale Deed, Encumbrance Certificate, latest tax receipts, Occupancy Certificate, Building Plan Approvals and Possession Certificate.
What documents are required to get a resale property registered ?
New Sale Deed, PAN Card, Photographs.
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.
What documents are needed for registration of an independent house?
Allotment papers of the plot, Building Plan approvals, Transfer Deed (in case of multiple owners), Sale Deed, PAN Card and Photographs.
What documents should I check before buying a new property?
- Sale Deed
- Title Deed
- Approved Building plans
- Completion Certificate ( Newly Constructed)
- Commencement Certificate( Under-construction property)
- Conversion Certificate( If agricultural land is covered to non-agricultural)
- Encumbrance Certificate
- Latest Tax Receipts
- Occupancy Certificate