One of the important issues a homebuyer deals with when negotiating a deal for a piece of real estate is an advance payment. Buyers' interests are protected when making an advance payment for real estate.
There are numerous additional expenses associated with owning the property, such as those related to formally transferring ownership of the asset. A developer may request an advance fee in real estate in a number of different ways from the buyer.
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These topics are covered in this article specifically.
Kamal Associates consistently upholds the transparency of all real estate transactions while safeguarding the interests of the buyer.
Booking amount or token money
Many developers will not talk about the terms and conditions of a property purchase unless they are really confident in the buyer's sincere interest. In order to confirm that the buyer is committed to buying the property, sellers frequently request the following:
- Goodwill deposit
- Token money for the reservation amount
- Earnest money deposit: Bayana.
Before the actual deal is discussed, this question is raised.
Advance payment is what each of the aforementioned terms means. A buyer must make a certain payment in order to confirm their desire to make a purchase. Typically, a seller will request a token payment for the property in the range of Rs. 50,000 to Rs. 1 lakh.
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Stamp Duty
When purchasing a property, a buyer is required by law to pay stamp duty. However, one must take their time when doing so. It's possible that you won't be interested in a property or that the seller will withdraw. Your investment in stamp paper might be useless under any of these conditions. All of these legal documents are actually neither refundable nor transferable. Therefore, carefully weigh your options.
Advance TDS payment
Since June 2013, a tax of 1% must be subtracted from the total sale consideration before the buyer can pay the seller in India for property sales exceeding Rs. 50 lakhs.
The buyer must deposit this 1% TDS, along with the buyer's and seller's PANs, with the government when completing Form 26QB. This prevents the seller from evading capital gains taxes. TDS on advance payments is fairly common these days, but you should always speak with your financial advisor before making any payments.
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Home loan advance payment
Take notice, prospective buyers of used homes! A home loan advance payment could be risky.
When a seller of residential property has an active mortgage on the property, they may begin by requesting an advance payment from the buyer to enable the transaction to be completed with the necessary paperwork.
A No Objection Certificate (NOC) from the lender is required, certifying that the loan has already been repaid and that the property is free and clear of any other debts. Although it seems straightforward, buyers should avoid making such payments.
Looking for comprehensive details on real estate transactions and how to protect your intentions when buying a property? Visit the knowledge base of Kamalhousing.com. We've compiled a list of real estate blogs that you might find intriguing.