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You can own as many properties as you want
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.
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.
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.
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 INR 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.
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.
The property could be converted from leasehold to freehold if the local laws allow 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.
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 perform 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 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.
Yes, you can execute Special Power Of Attorney to get your property registered by someone else.
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
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.
- Confirm the approved plans from the appropriate authority are in place.
- Check that all other permissions from various authorities are in place. E.g. Utility Companies, Environment clearance, Airport Authority, etc.
- Confirm that the Land title is clear and there is no disputes/litigation (Title Certificate).
- Confirm Builder has the Intimation of Disapproval (IOD) and commencement Certificate (CC) to start construction.
- Have the agreement evaluated by an Advocate. Check possession date promised and provide for penalty if Builder does not deliver as agreed.
- Check and negotiate the payment schedule.
- Do not book in Pre-launch without executing and registering the agreement. In Maharashtra, it is mandatory for Builder to do both at inception stage itself.
Same set of documents as above. The agreement must record the title flow, the various permissions taken and the terms agreed to by the parties. In Maharashtra, the Maharashtra Ownership Flats Act, 1963 prescribes disclosures to be made, documents to be attached and even a model agreement format which is mandatory in part.
- Approved plans
- Title Certificate from Advocate of current date
- Copy of IOD/Commencement Certificate
- Stamp duty paid receipt
- Demand Draft for payment of Registration fees.
- Property Card showing CTS No. of plot
- PAN cards of Sellers and Buyers
- Khata Extract
- Check for a duly stamped registry
- Ensure no dues are accorded to the builder
- Check for seller’s name in municipal record
- Confirm seller’s membership in the society (if formed)
- Ensure there are no pending bills, charges or taxes
- Make sure that the property is mortgage free
- Sanctioned Building Plan (to ensure no unauthorized construction)
- Previous title documents (that chain of title is complete)
Same documents as above would need to be verified for checking project approvals. Confirm approved plans, other approvals such as environmental clearances are important and NOC from utility companies. Title Search must be carried out at the Sub Registrar’s office to verify title and ascertain encumbrances, if any.
- Approved plans can be verified from the corporation or other plan sanctioning authority’s office.
- Ownership documents of land or development rights held by the builder can be confirmed from the Sub Registrar’s office where they are registered.
- Society share certificate can be verified from the Society itself.
As a general rule the following documents pertaining to immovable property must be registered vide Section 17(1) of the Registration Act, 1908:
- Instruments of gift of immovable property;
- other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees, and upwards, to or in immovable property;
- non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and
- leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;
- non-testamentary instruments transferring or assigning any decree or order of a court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property. In Maharashtra State, w.e.f. 1-4-2013, the following additional documents are also required to be compulsorily registered:
- agreement relating to the Deposit of Title Deeds, where such deposit has been made by way of security for the repayment of a loan or an existing or future debts;
- Sale certificate issued by any competent officer or authority under any recovery Act;
- Irrevocable Power of Attorney relating to transfer of immovable property in any way, executed on or after the commencement of the Registration (Maharashtra Amendment) Act, 2010.
- All original chain of agreements form part of the title documents and must be obtained by the buyer.
- Do remember to obtain the original registration receipts and the original stamp duty receipts.
- A letter of possession duly witnessed by two witnesses confirming the physical handover of the premises.
- In case of a Society, the original share certificate together with all transfer forms duly executed.
- Proof of payment of all dues such as maintenance, electricity, phone, water, property taxes upto the date of handing over possession.
- A limited power of attorney from the Seller(s) authorizing the buyer(s) to sign all documents and applications etc. pertaining to the said premises.
- An NOC from the Society or other body confirming that they have no objection to the transfer.
A title deed is a document that proves the right of a person to an immovable property. A person can acquire an immovable property by various means and a properly stamped and executed document evidencing the transaction is a title document. For example a sale deed, a release deed, a relinquishment deed, a gift deed, a family settlement deed, a partition deed, a will all are evidence of how a person has acquired an immovable property and may be called title deeds.
A will or testament is a legal document by which a person, the testator, expresses his or her wishes as to how his or her property is to be distributed at death, and names one or more persons, the executor, to manage the estate until its final distribution.
A person making a will must do so in writing and sign it in the presence of two independent witnesses. It is recommended to appoint an executor to the will, who will be responsible to administer all the properties as per the intention of the testator made in the will. It is not compulsory to register a will however it is advisable to do so in order to avoid future legal disputes.
A will comes into force after the death of the person making it. A probate is a document issued by the District Court under the signature and seal of the Chief Judge of that Court that certifies the authenticity of the will. The executor of the will must, within three years from the death of the testator, file an application/petition in the District seeking a probate of the will. Upon the receipt of such application, the District Court shall invite objections from all the legal heirs, if any, verify all the assets that are listed in the will and then issue the Probate.
A true copy of the probate along with the will has to be submitted with an Application to the City Survey Officer who will verify the same and accordingly make the necessary changes in the property Card. In the case of a flat in a Co-operative Housing Society or a Bank Account or locker that is required to be transferred in the name of a legal heir, a true copy of the probate alongwith the necessary Application is required to be made to the Co-operative Housing Society or the Bank, as the case may be.
There is no cap that is placed on the number of immovable properties, residential or commercial that an NRI or the holder of an OCI certificate can purchase. This means that an NRI can buy as many properties in India as he wishes, commercial or residential in nature, without any prior permission or approval from any authority. Therefore, there is no limit with respect to the amount of money that can be invested by the NRI in order to buy property in India.There are two conditions to the above:
- The property cannot be bought in foreign currency i.e. either the NRI has to use Indian Rupees or has to maintain an NRI Account as per the RBI Guidelines in India.
- In order to buy agricultural property, prior approval from the Reserve Bank of India is required.
The NRI will be required to pay the stamp duty charges that will be determined as per the value of the property purchases and the registration charges shall also be payable accordingly. In the event, a newly constructed property is purchased than the builder/developer may collect service tax from the NRI. Any other local or municipal charges to be paid are the same as a resident in India.
NRIs who have sold house property which is situated in India have to pay tax on the Capital Gains. The tax that is payable on the gains depends on whether it’s a short term or a long term capital gains. When a house property is sold, after a period of 3 years from the date it was owned – there is a long term capital gain. In case it held for 3 years or less – there is a short term capital gain. In case the property has been inherited, remember to consider the date of purchase of the original owner for calculating whether it’s a long term or a short term capital gain. When an NRI sells a property the Tax Deductible at Source (T.D.S) is liable to be deducted by the buyer. The rate to be deducted is based on the rate of tax in which the property is sold. If an NRI sells a property in India, how can he take the money out and what are his tax implications. And what is the withdrawal limit from the profits booked through sales?
An NRI can sell a property in India to the following persons:
- A person resident in India
- An NRI
- Holder of an OCI
However, agricultural property in India can be sold only to a person who is a citizen of India as well as who resides in India.
If the property was purchased out of rupee resources, that is, income earned in rupees, or the home loan is repaid by a relative who is a resident of India, the amount must be credited in the NRO account.
If the property was purchased while you were a resident of India, then the sale proceeds must be credited to the NRO account. You can repatriate up to USD 1 million per calendar year from your NRO Account (including all other capital transactions), provided you have paid all taxes due.
If the property was purchased while the person was a non-resident, the person can repatriate the proceeds outside India provided that you fulfill certain conditions:
- The Person should have purchased the property in accordance with the foreign exchange laws prevalent at the time you bought the property
- The amount to be repatriated will follow these limits:
- If the person purchased by remitting foreign exchange to India through normal banking channels, then the repatriation cannot exceed the amount that the person remitted.
- If the person purchased using funds in the Foreign Currency Non Resident (FCNR) Account, then the repatriation cannot exceed the amount paid through this account.
- If the person purchased using funds lying in his Non Resident External (NRE) Account, then the repatriation cannot exceed the foreign exchange equivalent, as on date of purchase, of the amount paid through NRE Account.
- If the person purchased a property by taking a home loan, then repatriation cannot exceed the amount of loan repayment that has been done using foreign inward remittances or debit to NRE/FCNR Accounts.
- If the person purchased the property using balance in your NRO account, then the sale proceeds must be credited to your NRO account and the person can repatriate to the extent of USD 1 million (including all other capital account transactions). In all these cases, the balance sale proceeds can be credited to the NRO account and you will be able to repatriate up to USD 1 million per calendar year (including all other capital account transactions).
Certain documents are required at the time of the registration of the Deed/Agreement. The following are the list of documents that are required at the time of registering the deed effecting the purchase:
- PAN Card
- A specific Power of Attorney authorizing a person to effect the transaction on the behalf of the NRI, if he is not personally present at the time of execution.
- Indian Passport or the Overseas Citizen of India Card.