If you are buying a new home, you may feel overwhelmed by the various processes involved, especially if you are a first-time home buyer. Not to mention, you may have to understand the meaning of various jargons and complex real estate-related laws.
Although you may consult a legal expert and get their advice to understand the implications of the jargon and the terms and conditions, it is advisable that you do your research as well and make yourself aware of the basic rules. In this write-up, we discuss a few important real estate rules that every home buyer must know.
Buying a home
If you are buying an under-construction property, the transactions must be done under as per laws laid under the Real Estate Regulation and Development Act, 2016. However, the laws for buying a ready-to-move flat are different.
For under-construction properties, if you have any legal issues with the builder, you must approach the RERA (Real Estate Regulatory Authority). For a read-to-move flat, you must approach the district-level consumer dispute redressal tribunal.
Whether you are applying for a home loan in Pune or any other city, you must comply with certain rules laid by RERA. And, if you fail to comply with the same, you may have to pay a penalty; the penalty amount varies based on the nature of the offence, and it may extend up to 5% of the property value.
Registering a property
When you buy any kind of real estate property, you must register the same; and unless you do it, you would not be the legal owner of the property. The rules for property registration are listed under the Indian Stamps Act, 1899.
When you register a property, you must pay a stamp duty, which may be 4 – 10 per cent of the property value. The stamp duty amount may vary from state to state. Additionally, you must pay a registration fee. This is one percent of the property value.
It is vital to note here that you don’t evade paying the registration fees or stamp duty because it is a legal offence. If you evade paying the stamp duty, you may have to pay a penalty, which could be up to 10 times of the original stamp duty. Also, you face the risk of imprisonment of up to six months.
If you want to transfer the ownership of the property, the provisions of the Transfer of Property Act, 1882 would be applicable. This could be done through sale, relinquishment or gift. However, as per the law, you cannot make a contract to gift a property that you hope to own in the future.
Tax benefits on home loan
When you apply for a home loan, you are eligible to get tax benefits on the repayment of the amount. The benefits are covered under different sections of the Indian Income Tax Act. For example, you can get a tax benefit of up to Rs. 2 lakhs in a financial on the repayment of home loan interest under Section 24 of the Indian Income Tax Act. Also, under Section 80C of the IT Act, you are entitled to get a tax benefit up to Rs. 1.5 lakhs on repayment of home loan principal amount.
Now that you are aware of the various real estate rules and laws, ensure that you comply with them diligently to avoid facing any legal consequences.