• Ownership documents of the property owner.
• Agreement to sell – Includes a description of the property, terms of conditions between the buyer and the seller, including agreed purchase price.
• Absolute sale deed and title deed - This is the actual transfer record of ownership of the property. It is registered at the sub registrar's office under whose jurisdiction the property would fall.
• Title search and report – This document records the history of the property and its owner and has to be registered with the concerned authority.
• Receipt of property tax – This document clarifies the status of previous taxes paid/due.
• Encumbrance certificate – This states that the property is free from all encumbrances or loans.
• Sanctioned building plan by statutory authority - This is to ensure that the buyers are watchful about any deviations from the sanctioned plan made by the developer.
• Power of Attorney (If any) – If any person is acting on the authorization of the owner of the property.
• Stamp Duty - Stamp duty is the transactional tax levied compulsory, which plays a key role in the transactions made on a property. It is pretty much similar to what a government collects for sales tax and income tax. Stamp duty is charged on the present agreement value or market value, whichever is high. It is levied by states and therefore, the rate varies from state to state.
Stamp Duty can be paid by Franking (submitted documents are processed by authorized banks via a franking machine), Stamp Paper (long & inconvenient method) & E-stamp (NEFT/RTGS).
• Registration Charges -
If the property is located in Corporation or Municipal Council area – 5% Stamp Duty, 1% LBT and 1% Registration Charges or up to Rs. 30,000/- whichever is less.
If the property is located in Rural area – 4% Stamp Duty, 1% LBT and 1% Registration Charges or up to Rs. 30,000/- whichever is less.
• After your home loan is approved and you start paying EMIs, you pay for it in two parts - the principal amount and the interest. Under section 80C, the total amount of principal paid by you in a financial year (1 April to 31 March) can be claimed as a deduction from gross total income. This is a very big relief provided by the Government as you are required to pay hefty equated monthly instalments (EMI). (Maximum tax deduction allowed under Section 80C is Rs. 1,50,000.)
• Homeowners can file a claim for deduction on their home loan interest of up to Rs. 2 Lakhs. This is applicable if the owners are living in the property or if it is vacant as well. In case, if you have put your property on rent, then the entire interest on the home loan can be deducted. However, your deduction on interest is limited to Rs. 30,000 instead of Rs 2 lakhs if both the following conditions stand satisfied:
1. The loan is taken on or after 1 April 1999.
2. The purchase or construction is not completed within 5 years from the end of the FY in which loan was availed.
• Under Section 80EE of the Income Tax Act, the homeowners with only one house property on the date of sanction of loan can avail the tax benefit of up to Rs.50,000.
• These benefits are not available for an under-construction property.
If you are applying for a joint home loan along with your spouse, friend or a relative and you are co-owning the property then you are eligible for tax benefits. And can each applicant can make a claim up to the full amount under Section 80C and Section 24.
• House Rent Allowance (HRA) is a salary component, allotted by the employer towards employees rent accommodation. It is very beneficial for the employee as it gets calculated for tax deduction purposes while filling TDS for a financial year.
• In case, you have a home loan for your property, and you are living in another apartment on rent, then you are allowed to make two separate claims. One is for the home loan tax benefit and another for the benefit pertaining to HRA (House Rent Allowance). List of documents required for both are different, so, plan in advance and keep them ready to enjoy the maximum tax benefits under such condition.
