Quickies :Selling your property? Get the papers in order

 
 Quickies  :Selling your property? Get the papers in order

 

Source:Vidyalaxmi, ET Bureau

Planning to sell your old house to buy a new one? Undoubtedly, residential properties sell like hot bread in metros like Delhi, Mumbai or Chennai , or even in tier II towns like Pune, Coimbatore or Chandigarh. It was a simple journey for Bangalorebased software professional Puneet and his wife Haimanti. They sold their house in Mumbai as they were relocating to Bangalore. The couple hired a broker to facilitate an easy transaction.

“The broker would get serious and committed buyers,” was Puneet Malviya’s logic. Ms Haimanti also looked at various real estate portals to post an advertisement but found the entire process time consuming. “Eventually we settled for an offline broker,” she said.

Even Ashish Avasthy, a Mumbai-based corporate lawyer, preferred to trust his broker who helped him buy his first house for similar reasons.



What are the essential documents you need to sell the house?
The documents required to sell a residential property are the housing society share certificate and the sale/purchase deed. Sale deed will confirm if the land is in the name of the seller and only he/she has the full right to sell the land.

You need a copy of previous deeds, if required, to confirm the authenticity of the deal and the property. You also need original copies of stamp duty and registered house documents . The seller will also require an NOC from the housing society. In case of a joint ownership, the owner/owners have to submit documented consent .

Home buyers insist on these documents if they are opting for a housing loan. “We sold our house to an old couple who bought the house from their own savings. Hence, theydidn’t insist on too many documents ,” says Mr Avasthy.



How should you file for missing documents?


Both the Malviyas as well as the Avasthys didn’t have a problem with missing documents as they had invested in new constructions. But, often old houses, which are 30-40 year old constructions, may not have proper registration .

In such cases, the owner should ideally pay off the outstanding stamp duty and file for a registration. “In the case of a missing share certificate, the intending seller should request the housing society to issue a duplicate copy. If the sale/purchase deed and/or chain of agreements/deeds are misplaced, an indemnity bond needs to be furnished by the seller, along with a confirmation letter from the housing society,” explained Mrunal Duggar, vice-president — Homebay Residential , Jones Lang LaSalle Meghraj.

Similarly, if the original copy of stamp duty and registered house documents are unavailable, an indemnity bond should be furnished by the seller. “In any case, the deed needs to be registered after paying up the valid stamp duty. A public notice also needs to be issued,” Ms Duggar added.

Is your property mortgaged with the bank?


You cannot sell the property if you are still servicing the loan. “We paid off the loan amount from the first instalment we received from the home buyer. We took our payment in tranches for an easier transaction ,” said Ms Haimanti.

Mr Avasthy, on the other hand, paid off only 99% of the loan and paid off the balance 1% over a period of one year to avoid foreclosure charges.

But, the bottomline, is you can’t sell a mortgaged house if the buyer insists on accurate paperwork to apply for a loan.


How does one get an objective evaluation of the house?

The value of a property is decided by various factors, including the cost of similar properties in the same location , the view of the apartment, the available amenities in the building and the overall market trends in terms of appreciation and depreciation.

Apart from checking out with your neighbours, get the property evaluated by 2-3 brokers to get a realistic quote.

What are the other clearances before putting the house on sale?

Apart from the title clearance and NOC from the society , the precise details pertaining to the age of the building, the floor plan, the carpet and built-up area, the conveyance of the society, car parking status, land title (free hold/lease hold/collectors land) and transfer charges of the building and the apartment need to be attended to.

What are the tax implications?


The capital gain would be exempt from tax under Section 54 and Section 54F if the sale proceeds are invested in a residential house and if you do not own more than one residential house at the time of purchase of such a house.

But you have to purchase the new house within a year before the sale. Otherwise, this capital gain or net consideration is required to be deposited in a separate account before you file the return . You can reinvest only in a residential property. This doesn’t include a commercial property or vacant plot of land. Similarly, short-term capital gains enjoy no exemption.

“The house you are planning to sell would be classified as short-term capital asset as the holding period is less than three years. There is no exemption available on reinvestment, be it a new house or capital gains tax saving bonds,” explained Vaibhav Sankla, executive director, Adroit.