Read This Before You Sell A Residential Property

Selling a residential property is no easy task. Many home owners sell homes without much ground work, which leads to extended timelines and at times, lower value of the property.Here are some things to know before selling a residential property:

Value of the residential property: Price is the most important factor when selling a residential property in India. These vary depending on the location, the amenities and the maintenance of the property. There is no defined or legal method to calculate the exact value of the property. However, there are some indicators which you can follow to ascertain the right value of your property. Firstly, speak to a number of property brokers and check the value of other properties for sale in the area. Let them make a quote on your home. Secondly, look at the recent deals that some of your neighbours or people in the locality have sealed. That will help you know the base price of the property. Lastly, read and research online on the properties in your area.

Get the documentation right: Many ancestral properties have many legal heirs who are not easily traceable. Buyers tend to avoid resale apartments in India that have legal heir issues, as legal procedure can be lengthy and expensive. To ensure that this does not happen, mutate the property and do a thorough background check on the successors with whom you might have to share the property with. 

Cross-check society rules and get an NOC: An NOC from the society before selling the property is important. It is also crucial to clarify with the society whether they are going to levy charges on the buyer of the property. There are many society rules for selling and buying residential properties. The societies, largely need to give a clearance on maintenance or society-fund related charges before you can complete the sale transaction. If the property is new and a building society is yet to be set-up, you have to deposit the money with the builder for a society. While selling the property, you can either take a refund from the builder or charge it to the buyer.

Taxes of the transaction: When you sell a property in India, Income Tax Department treats it as a capital gain. Thus, the money earned is taxable. It is important to understand how much tax you have to pay and if there are ways to get some exemption. For instance, you can get tax exemption for realty sale by investing the money in government bonds. Deducting tax will also give you a correct idea of the profit you can get from the transaction.

Form of payment: Before selling the property, you need to plan on the form in which you get paid. The government suggests cashless transactions. However, if you want to be paid in cash, prefer to take only a part of it in that form and rest of the payment in the form of DD or cheque. The Indian government, in the Budget 2015-16, has prohibited cash transaction of more than Rs 20,000 for immoveable property.

Use the money right: Considering you might already have the right reasons to sell a property, knowing what you will do with the money will make you approach the sale in the right way. Make an investment plan before you sell it because the time that you spend planning an investment can cost you interest.

(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)