Are you seriously looking to sell your home?

But are you aware about legal aspects and Tax liabilities before selling your residential property?

Actually, Selling your  residential property needs proficiency  in many areas for a smooth transactions, without any controversy and to get the best return on your investment done in that particular property. Both Legal and taxation aspects have equal importance which can make or break the your deal.

Secondly, It is very crucial to know the proper steps to execute the transaction in crystal clear terms and also have clear discussion with the buyer of your property on who is going to bear the charges whatever they are either legal or any miscellaneous that are done during the entire transaction.

Taxation Aspects:

Just for information, If any property is sold within two years of buying, any profit from the property is treated as a short-term capital gain in the hands of the property owner. It is always accounted in the total income of the owner of the property and tax is levied as per applicable taxation slab rate.

And If a residential property is sold within five years of the end of the financial year in which property was purchased, then the tax benefits claimed are not applicable. The tax deduction claimed for the principal repayment, stamp duty and registration under Sec 80C are reversed and the amount becomes taxable in the year of sale. Only the deduction of the interest payment under Section 24B is left untouched.

As per the Experts opinion, one should always deduct TDS of 1% when the property is worth more than Rs. 50 Lacs ( As Form 26QB is to be submitted to Income Tax department).  This payment should always be made on behalf of the seller and should be linked with Permanent Account Number of the seller of the property. The seller must take the TDS certificate from the buyer of the property. In case there is of loss on the sale of the property or claiming exemptions from long term capital gains tax, the seller can claim a refund for TDS on the tax return by providing the relevant details.

The seller can also claim exemption from the long-term capital gains tax if seller within 6 months of property transfer, invests the capital gains in long term specified bonds as notified by the Govt. Of India like National Highways Authority of India and Rural Electrification Corporation Limited which is for the minimum period of 3 years (Section 54 EC).

LEGAL ASPECTS

As per my experience and studies,

Following are the key legal points to keep in mind while selling your property:

• Firstly, It is always preferable to Sign up an Memorandum of Understanding with the buyer of your property in the beginning of the deal  which have all the details of the discussed transactions and the liability of each party in that transaction. This memorandum of understanding should always be drafted by a legal expert or advocate.
• Secondly, The Agreement to Sell should be prepared with the help of a legal expert or an advocate and that needs to be read as well as reviewed completely again and again to avoid any legal issues or litigation in future.
• Thirdly, The Agreement to sell should always have the clause of handover of property and the same has to be respected in the written and verbally. Any delay in handing over the property is also termed illegal offence and is liable for prosecution in the court of law”

Finally, to summarize you should get prepared all the legal document list with the help of an expert  either an advocate or property consultant and be ready with the copies of those always available to show the it to prospective buyer of your property.

Always check current prevailing market conditions and judge whether it is a right time to sell your property or not. Before getting your property in the market make sure that property is in good condition as that will add value to pricing of your property.

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Author: NIKITA DAGAR