10 Property FAQs answered

10 Property FAQs answered

Purchasing a property at any point of time can get overwhelming, owing to the long process it holds. Staying well educated and properly prepared for the journey is something crucial in this scenario.

Even an experienced home buyer can lose track of what to do, for ensuring the process stays relatively smooth. It is quite natural to have a plethora of questions when buying a home. Therefore, it’s important to understand that “no question is extraneous.”  When in doubt-Ask!

Here are the 10 frequently asked questions when buying a property:

 

1) What are the important documents to be checked before buying a home/property?

Once you settled on a home of your choice, it is necessary to mark on some important documents closely. Approved layout plan, the building plan, ownership documents, proof of payment of all dues like maintenance charges, electricity bills, phone, water and property taxes are some important papers you’d need before buying a property.

 

2) 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 by the home buyers. The tax incentives can be claimed up to Rs 1.5 lakhs on stamp duty along with registration charges on a new property purchase or construction of a house.

 

3) What are the taxes that I need to pay before buying a property?

The buyer needs to pay the following taxes:

  • TDS – Tax deduction on the amount exceeding Rs 50 lakhs for the purchase of a property.
  • Stamp duty – Tax paid for the legal identification of property by the home buyers.
  • Service Tax – Applicable if the property is being purchased from the builder who conceived and constructed the project before offering possession to the buyer. In the case of a `ready to move in’ property, the service tax is not applicable.
  • Value Added Tax (VAT) – If applicable in the concerned state.

 

4) If I have money, is it still necessary to avail of a bank loan for buying a home?

It is generally helpful to opt 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

 

5) 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:

  • General Power of Attorney – where a property owner confers ‘general’ rights. The rights include but are not limited to sell, lease, sub-lease etc.
  • Special Power of Attorney – where only a specific right is given by the owner to the chosen person.

 

6) How can I register my property?

Registration of a property includes necessary stamping, registration charges and getting it recorded at the sub registrar’s office. When a property is purchased from a developer directly, getting it registered amounts to acting of legal conveyance.

 

7) What is home insurance? How do banks evaluate the property for insurance?

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.

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.

 

8) What is a down payment?

Generally, banking financial institutions pay around 75% to 85% of the purchased property’s cost. The remaining 20 % of the amount is paid up front, which is popularly known as the down payment.

 

9) Can a single woman get a loan?

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.

 

10) What are the types of Home loans available?

The banks usually offer these seven types of loans on interest:

  • Home Purchase Loan: Commonly taken for purchasing a new residential property or an old house from its previous owner.
  • Home Improvement Loan: Offered for executing repair and renovation work at home.
  • Home Construction Loan: Not very commonly available, this loan is sanctioned to construct a house on a piece of land you have already purchased.
  • Home Extension Loan: Offered for expanding or extending an existing house.
  • Land Purchase Loan: Granted to purchase a plot of land for both residential or investment purposes.
  • Home Conversion Loans: Offered to people who have to own a house from a home loan but now wants to buy and move into another house. It can be transferred from the current loan to the new house.
  • NRI Home loans: Structured to suit the requirements of NRIs who are building or buying a home in India.

When investing in a property each and every question that comes to your mind is important and must be addressed. So, clear all your doubts research well and never hesitate to ask questions as it will surely help you find the property of your dreams!

Last updated on July 13, 2017

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