Do you really know how much you pay for your house? While some owners choose to give an all inclusive listed price, others do not mention the additional charges. Depending on market conditions, every buyer has a fair chance to negotiate and developers or home owners may be willing to give a discount. If you are a prospective buyer, here are a few things you should reserve a little extra for- Inherent values - Most values are usually estimated, as the common practice among home owners is to estimate the value at par with a house sold for the highest price. Sunder Ahuja, a businessman in North Delhi says, “It is believed that if my neighbour could get Rs 1.5 crore for his house which was two years older than mine, I am better placed to ask for this sum.” Consequently, Ahuja’s home in Roop Nagar is listed for Rs 1.6 crore. If you are a buyer make sure you are up to date with trends. PropIndex, the India Apartment Index by Magcibricsk, points out trends in the market with analysis of data along with inputs from financial experts, city managers and trend watchers. TDS on property - As per the Tax Information Network, the Finance Bill 2013 has proposed that purchaser of an immovable property (other than rural agricultural land) worth Rs 50 lakh or more is required to pay withholding tax at the rate of 1% from the consideration payable to a resident transferor. For example, if the property is sold for Rs 70 lakh, would TDS be calculated on the excess (over Rs 50 lakh) or on the actual amount, which is Rs 20 lakh or Rs 70 lakh? TDS is to be deducted on the amount paid/credited to the seller. Thus, in this case the deduction will be on the total amount i.e. Rs 70 lakh. Stamp duty and registration charges - Stamp duty charges are not included in most listed values. While working on a budget, you might slip on calculating it. In actuality, stamp duty charges are obvious and not exactly ‘hidden costs’. Respective state governments have stamp duty and registration charges on the declared value or the circle rate, whichever is on the higher side. The percentage varies across states. In some states women buyers benefit because of a concession. Advocate Rajesh Sharma of Rajesh Sharma and Associates says, “In Maharashtra, women do not have the benefit of stamp duty concession unlike in Uttar Pradesh.” Registration charges are usually 1 per cent of the property’s value. Brokerage - Be it rental or capital market, brokers always ask for a share. Pankaj Jha, realtor at Sree Lakshmi Properties says, “Normally, it does not exceed 1 to 2 per cent of the total transacted cost. Most buyers are good at bargain in the property market.” Preferential Location Charges – Do you want to choose which side of the apartment you want to live in? Whether facing the park, or the sea or a holistic view? Be prepared for the Preferential Location Charges (PLC). Multiply the super area with the charges mentioned in the builder’s rate card - that is the PLC. Miscellaneous - Experts at Jones Lang LaSalle indicate that there might be a service tax at a rate of 12.36 per cent on certain services like insurance, real estate and stock broking, pipeline transport of goods, site formation or demolition, club memberships, legal consultancy services, electricity exchange and related internal or external developments. Do not fail to account a home loan processing charge that may account to 0.05 per cent of your loan amount. Precautions The expenses incurred during the initial period of a property transaction can amount for as much as 10-12 per cent of the overall cost of the property or of the total amount of the home loan – 5 per cent towards stamp duty and 5-7 per cent for additional charges. There is little scope for an uninitiated buyer to be aware of all the costs. The only reliable method of judging the overall initial financial outlay is to engage the services of an experienced property consultant
Posted on: Tue, 23 Dec 2014 09:53:07 +0000
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