Factors considering if you're thinking when purchasing an old house.
Updated: Sep 6
1. Legal Verification:
Verify the title of the property through legal documents to confirm ownership and ensure there are no disputes or pending litigations.
Check the chain of ownership documents to make sure the property is clear from any legal issues.
2. Property Documents:
Obtain and scrutinize documents like Sale Deed, Title Deed, Encumbrance Certificate, Property Tax Receipts, etc.
Ensure that the property has been registered with the appropriate authority.
3. Physical Inspection:
Thoroughly inspect the property to assess its condition, structural integrity, and maintenance requirements.
Look for any signs of water damage, structural issues, or repairs that might be needed.
4. NOC from Society/Authority:
If the property is located within a cooperative housing society or apartment complex, obtain a No Objection Certificate (NOC) from the society or residents' association.
5. Outstanding Dues:
Verify if there are any outstanding utility bills, property taxes, or other dues related to the property. Ensure that the seller clears these before the transaction.
6. Mutation of Property:
Ensure that the property's ownership details have been correctly updated in the local municipal records. This is important for transferring ownership.
7. Valuation and Negotiation:
Get a professional valuation of the property to determine its market value.
Negotiate the price with the seller based on the property's condition, location, and market trends.
8. Legal Assistance:
Engage a legal expert or a property lawyer to review all the documents and guide you through the legal aspects of the transaction.
9. Home Loan and Financing:
If you're planning to take a home loan, ensure that the property is eligible for financing by the bank or financial institution.
10. Due Diligence with Government Authorities:
Verify with the local development authority or municipality to ensure that the property adheres to all zoning and construction regulations.
11. Tax Implications:
Understand the tax implications of purchasing an old property, including stamp duty, registration charges, and capital gains tax.
12. Agreement and Registration:
Draft a sale agreement that outlines the terms and conditions of the sale, including the purchase price, payment schedule, and possession date.
Register the sale agreement with the local sub-registrar office to make it legally binding.
13. Possession and Handover:
Ensure that the seller provides possession of the property as per the agreed-upon terms and conditions.
14. Insurance:
Consider getting property insurance to protect against unforeseen events and damages.
15. Change of Ownership:
Complete the necessary paperwork and formalities to officially transfer the property's ownership to your name.
Exploring Latest Income Tax Provisions in India: Exemptions for Buying New/Old Houses-
In addition to the factors mentioned above, understanding the latest income tax provisions in India is crucial when considering the purchase of a new or old house. These provisions offer exemptions that can significantly impact your financial planning. Here's a general overview of the provisions and who can avail them:
1. Section 24(b): Interest on Home Loan
Under Section 24(b), you can claim a deduction of up to ₹2 lakh (₹3.5 lakh for senior citizens) on the interest paid on home loans for a self-occupied property. This is applicable for both new and old houses.
For properties that are not self-occupied (rented out or deemed to be rented), there is no upper limit on the interest deduction.
2. Section 54: Capital Gains Exemption on Sale of House Property
Section 54 provides an exemption from capital gains tax if you sell a residential property (old or new) and use the proceeds to purchase another residential property. The new property must be purchased within one year before or two years after the sale, or it can be constructed within three years after the sale.
The amount of capital gains used for purchasing the new property is exempt from taxation.
3. Section 54F: Capital Gains Exemption on Sale of Any Asset (Other than House Property)
If you sell any asset other than a house property and use the proceeds to purchase a residential property (new or old), you can claim exemption under Section 54F. The conditions for this exemption are similar to those under Section 54.
4. Section 80EEA: Additional Deduction on Interest on Home Loan
This section provides an additional deduction of up to ₹1.5 lakh on home loan interest for affordable housing. This deduction is available over and above the limit of ₹2 lakh under Section 24(b).
Who Can Avail?
1. Section 24(b): Interest on Home Loan
Individuals who have taken a home loan for a self-occupied property.
Applicable to both new and old houses.
Differentiates between self-occupied and rented-out properties.
2. Section 54: Capital Gains Exemption on Sale of House Property
Individuals who have sold a residential property (old or new).
The proceeds must be used to purchase another residential property.
Property must be purchased within specified time frames.
3. Section 54F: Capital Gains Exemption on Sale of Any Asset
Individuals selling any asset (except house property).
The sale proceeds should be utilized to buy a residential property (new or old).
4. Section 80EEA: Additional Deduction on Interest on Home Loan
Introduced for individuals.
Specifically designed for affordable housing.
Provides an additional deduction on home loan interest.
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