The term ‘real estate’ has different definitions across countries and cultures, but one thing is universal – it comes with lots of responsibilities! In this article we will discuss what real estate means in India, so that you are fully prepared to start investing or running your own business.
We will also talk about how real estate works in India, the types of property available, and some important terms.
Registration of property with government
The second most important step to owning a home is registering your property with the appropriate authorities. This includes both national as well as state governments.
Most countries have some sort of system where you can register your residence or land. In many western nations, this process is very easy done through online resources and applications that are designed for this purpose.
In developing economies like India’s, this process can be slightly more complicated.
There are several ways to go about it depending on what type of registration you want and who you talk to. Some agents and brokers work exclusively for a few companies, so make sure to find out which ones they are affiliated with before talking to them.
You should also do your research on different registries and see if there are any fraudulent practices happening around yours.
Taxation of real estate
The Indian government offers many different types of tax breaks for property owners, which typically include income tax deductions and/or exemptions. These are not always known to the average person however so this article will go into some detail about them!
There is also what’s called “Section 74” of the Income-tax Act, which allows investors to write off their capital gains as business expenses if they meet certain conditions. And while it may sound strange, there is actually an example of this happening in our daily lives!
The vast majority of high-income professionals pay attention to taxation laws during the year, but few people review these rules at the end of the year when they renew their licenses or clear their personal belongings. When you sell your house, you have to report the price you sold it for, as well as any profit you made.
However, most people don’t update their taxes after that, leaving themselves with large potential liabilities come time to file again next year. For individuals who earn more than $100k per year, that can add up quickly!
By reviewing your past tax returns before buying or selling another home, you can avoid potentially big penalties later. Luckily, we’ve put together a list of things you need to know about investing tax-efficiently, including how to recognize investment opportunities and whether or not owning a house is a good idea.
Who can sell property
So who can actually offer to buy or sell real estate properties in India? The answer is pretty much anyone! Before we dive into this, let’s take a look at some quick definitions.
A seller will generally list their house with a agent (this term includes agents that are paid by sellers, agents that are paid by buyers, and those that are both). An agent that lists homes for sale typically works for a large agency that has staff members and brokers that they send you to represent you as the buyer or seller.
An agent that is paid by the seller represents the seller and gets a percentage of the sales price in return. Agents that are paid by the buyer work similarly, but get a percent of the profit instead! This can add up quickly if they bring in lots of money through success.
Agents that are both seller and buyer focused do not have one set revenue source, instead they find ways to make enough to survive. Many start out being only sellers then slowly transition into becoming buyers before finding themselves with too much exposure to the market. There are many strategies along these lines for income.
Who can buy property
There are two main types of people who can purchase a house is either as an individual buyer or as a couple. As a first time homebuyer, it is important to know that not just anyone can purchase a house. This includes individuals and couples with very large savings.
As a non-individual purchaser, you will need to be married for at least one year, must have proof of residency (proof of address) in India, and must prove your income by providing bank statements and tax returns.
Individual buyers do not face these restrictions, they must only be over 18 years old and must provide personal documents such as ID cards and passports.
There is also another type of person who can purchase a house, this is called ‘second owner’. Second owners cannot live in the house themselves, but they can transfer ownership to someone else. For example, if Mr A buys a house from Mrs B, then later Mr B wants to sell his house, he can give his share of the house to Mr A.
Legalities of selling property
The second thing to know about selling real estate in India is that you need to be aware of your legal obligations as a seller.
As a seller, you are legally obligated to give adequate notice before you actually sell the house.
This can range from one week (the most common) all the way up to six months depending on what type of sale you have (ie. contract for sale, auction). It’s best to find out how long the law requires before you decide to pull the trigger on a sale!
You also have an obligation to inform potential buyers about any liens or other encumbrances on the property. This includes things like mortgages, water bills, taxes that are past due – even if you don’t plan on paying them yourself, you should at least let people know so they don’t get stuck with the bill.
Your neighbours too have a right to know about any unsightly features of the home that could potentially affect their own properties. These might include loud noises coming from inside, excessive car traffic, or anything else that would make it difficult to enjoy the space.
Ways to get your home ready for sale
While it is not necessary to have a professional handle your house, you do need to make it presentable. This includes cleaning up outside the house, organizing and de-cluttering inside the house, and improving the surface of the property that people can look at.
You should also consider what types of pictures and documents you want to include in your listing. Make sure they are clear and authentic!
There are many ways to promote your property online. You can put up photos and descriptions yourself or hire someone else to do it for you. The best way depends on your budget as well as the kind of market you wish to reach with your house.
Some experts suggest doing several test listings before putting all your time and energy into one house so that you will know how it goes down.
Appeal the home to potential buyers
As mentioned before, your property will most likely sit idle for months or even years after you sell it. What people do with their time is very important when trying to sold a house fast!
So how can you make your house more appealing to prospective buyers?
You should consider doing some cost-effective remodels such as painting, changing the furniture, tiling the flooring, etc.
But also more expensive changes like renovating or building from scratch are worth considering if necessary.
Remodeling that’s done well will definitely increase the appeal of your house, but be careful not to overdo it. You don’t want to look too much like you invested heavily in your house.