The sale of residential property requires much due diligence on the part of the seller of the property. In a sales transaction, the role played by the seller is also crucial because he should ensure that there are no disputes and to get the highest possible return from the property. He has to get all the property documents in place and clear all his dues pending on the property before engaging the purchase process. He is also mandated by section 55 of the Transfer of Property Act to disclose all the relevant details about the property to the buyer.
Thus it becomes important on his part to resolve all the issues concerning the property. The two main aspects that concern the seller in the transaction are the legal and taxation factors. There are liabilities on the seller to pay a long-term capital gain tax if he has been holding property for more than two years when he sells the property. The seller should also understand the process of execution of the transaction.
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What documents do I need to sell my house?
The various documents required for the sales transaction includes:
The original sales deed of the seller from the time of his purchase is important to show his title and interest in the property. If the seller has lodged his title deed with the registrar then he is required to present the copy of the sales deed along with the receipt from the sub-registrar where it has been lodged for registration.
The seller also has to keep the approved building plan of the property along with the commencement certificate, completion certificate, and even the occupancy certificate issued by the competent authority. These documents are important as it shows the area covered, build-up area and the open area of the property.
When a seller is trying to sell his property he has to get the permission of the competent authority. The seller is also responsible to maintain the original stamped receipts of payment made by the seller to the developer as the buyer has the right to demand the same. The importance of the society documents is necessary and the seller should ensure that he has the society certificate for the transfer of the property. The seller should also get it certified that he has no outstanding payment from society.
It is a document used to indicate a free title. At the time of purchase, the buyer would want to ensure that there are no legal dues that are pending on the property and hence this document becomes vital. It also certifies that the property is not under any mortgage. You can make an application for the same in the Sub-Registrar’s Office.
After the documentation is done, it is important to agree to sell. This document lists the various terms and conditions of the sale along with the market value of the property after appraisal, the initial deposit made by the buyer, etc. It can be done through a power of attorney which needs to be registered to become effective. The agreement needs to be drafted by a lawyer to avoid any fraudulent activities. It is drafted on a non-judicial stamp paper.
What documents do I need for taxes if I sold a house?
The various documents that are required for tax purposes after the sale of the property include:
- The Report of your capital gains is an important document as sellers are required to pay 20% of the sales value after indexation which is a technique to adjust income in the price index. However, the seller can be exempted from the liability if he chooses to re-invest the long-term capital amount under sections 54 and section 54F of the Income Tax Act.
- Record of your mortgage interest payments on the property. This is beneficial in availing tax considerations.
- Closing Statement is the receipt of the sales transaction engaged in and has importance as your taxation charges are calculated accordingly.
- Records to show the cost you have incurred like renovation receipts, etc. that helps in reducing the home sales tax liability.
- Documentation to prove that the property and house you are selling is your primary residence such as the utility bills, etc. You should also submit documents or any other records which show the transactions made on your property.
Is a PAN card mandatory for selling a property?
Since the transfer of property involves the transfer of large amounts, it is important and mandatory that the parties engaging in the transaction should have a PAN card. All the buyers are required to have a pan card even though it is not mandated by law to make the procedures a lot simpler. Both the buyer and the seller have to submit their PAN card for a sales transaction above Rs. 5 lakhs.
In cases of purchase of a home, the buyer should submit a copy of his and the seller’s PAN card to avail deduction on the TDS. If the seller does not hold a PAN Card, then the buyer is entitled to a 20% deduction instead of 1%. The seller is also liable to make a payment as long-term capital gains tax based on the profit that he receives from the property. However, he is entitled to certain exceptions under sections 54 and section 54F of the Income Tax Act, and to avail them he needs a PAN card. An NRI seller or a buyer needs to have a PAN card as well.
What paperwork do you need for sale by the owner?
The various paper works that need to be done by the owner to carry out the sales transaction on his property include:
- The contract of sale contains the price of the property.
- Documents showing ownership
- Property surveys if they are conducted
- All the permits, certificates, and other documents of the renovation along with the receipts of repair.
- Copies of the inspection records showing previous sales.
- Mortgage document if the property has been mortgaged and a NOC from the lender if the loan is still pending.
- The tax records of the property.
How much does it cost to sell a house?
The various factors that contribute to the determination of the cost of selling your house include the cost of:
- Professional fees that need to be paid to the realtors and the attorney for availing their services
- Notary fee
- Transfer taxes or recording fees
- Money paid on the repairs
- Recording fees.
- Foreclosure charges (if any).
Summing up, it is to be stated that the sale of a property is something that calls for major responsibilities on the part of the buyer and seller. The seller has to consider the various legal and tax-related aspects while carrying forward the sales process. The seller is required to carry out various paper works and keep various documents intact for the buyer to verify and cross-check.
It is also important in a sales transaction that both the parties have a PAN card as various tax benefits could be availed on the submission of the PAN Card. It is important to keep all the documents and prepare a checklist of the same to smoothen the process.