Apartments in Kerala | Veegaland Homes | Buying tips for flat buyers

Aquisition of Immovable property

By NRI's holding Indian Passport

NRI's holding Indian passport do not require prior permission of Reserve Bank of India to buy residential or commercial immovable property in India.
The purchase consideration may be paid either by remittance of funds from abroad through normal banking channels or out of NRE / FCNR / NRO account.

NRI's of Indian nationality do not require any permission for acquisition, transfer or disposal by way of gift of immovable property which is not a farmhouse or agricultural land or plantations property. Declaration on form IPI 7 for acquisition of commercial property for carrying on any industrial, commercial or trading activity by their proprietary / partnership firm in India is required to be filed with RBI within 90 days from date of purchase.

By foreign citizens of Indian origin

Under the general permission to NRI's holding foreign passport, the RBI has allowed them to acquire, hold, transfer or dispose off by way of sale or inheritance, immovable properties situated in India.
The general permission has been granted provided :
- The property is for the purchaser's bonafide residential use;
- The purchase consideration is met either by remittance from funds abroad through normal banking channels or out of NRE / FCNR.
- Income accruing by way of rent from the properties purchased or acquired by inheritance will not be allowed to be repatriated abroad even if the purchase consideration was met out of NRE / FCNR account.

It is however, necessary for foreign citizens of Indian origin to declare such property to RBI within a period of 90 days from the date of purchase in the prescribed IPI 7 to the Chief General Manager, Exchange Control Department, Foreign Investment Division, Central Office Department, Foreign Investment Division, Central Office, RBI Bombay.

Sale of Immovable property

General permission has been given to non residents holding Indian passports and foreign citizens of Indian origin, whether resident in India or not, to dispose of by sale or inheritance immovable properties situated in India subject to certain conditions.
Non residents holding Indian passports and foreign citizens of Indian origin have been allowed to repatriate original investment in equivalent foreign exchange in residential/commercial properties after obtaining prior approval subject to a maximum of two houses under certain conditions.

No transfer of any immovable property exceeding the specified value for different cities can be effected unless particulars are filed with the appropriate authority of the Income Tax department within 15 days of signing the agreement.
As per a new scheme of capital gains tax with effect from 1993-94, instead of deducting from the proceeds of transfer, actual amount spent to acquire the asset or the amount spent on improvement or addition thereto, the inflation index adjusted cost will be deducted. Brokerage, legal fees and other expenses incurred in selling the property would be allowed as a deduction from the taxable capital gains.

Exemption From Capital Gains On Sale Of Residence

Capital gains arising on transfer of a residential house, comprising buildings or land appurtenant thereto, is exempt if the amount of capital gains is utilized in acquiring another residential house, either by purchase or by construction. The exemption cannot be claimed for vacant land as it is niether a residential house nor income therefrom is chargeable. The conditions required to be fulfilled to claim exemption here are :

the capital asset being transferred is a residential house, including self occupied house
income from the house is chargeable under the head - Income from house property
the house is a long term asset
the tax payer purchases or constructs a new residential house within the time specified

Letting out Immovable property

The RBI has granted general permission to NRI's and foreign citizens of Indian origin, to let out their residential properties acquired for their bonafied residential purpose but which on account of their residence abroad, are not required for their immediate residential purpose. However, there are restrictions regarding the repatriation of the rental income earned from such letting out of the property. The rental income is on a non-repatriation basis. Thus funds ( rental income ) must be credited to the NRO Account/ Resident Accounts in India.

Income From House property

If the building or part thereof is used by the owner himself for the purpose of his own business then there will be no income from house property in respect of such building, the profits of which are chargeable to income tax separately. While the owner of the property is liable to pay tax, ownership will also include deemed ownership. Whenever a person who owns a house property in one city is transferred to another city, it has been specifically provided that the annual value of such a property would be taken to nil subject to the following conditions
the assessee must be the owner of only one house property
that house property he cannot occupy because of his employment, business etc. away from the place
the property must not have been actually let or any benefit derived therefrom
no other deduction will be available to the assessee.

Do’s and Don’ts of buying Real Estate

Buying immovable property in India is fraught with difficulties due to a combination of factors. A meticulous planning at the investment stage itself could indeed avoid hassles later. Some of the pre-requisites indicated below would immensely assist NRIs.

Before buying immovable property:

Scrutinise all original payment documents. The title to the property may be single or joint ownership basis. In the event of any difficulty, a certified copy can always be obtained from local sub-registrar’s office on payment of a nominal fee.
Refer the documents to a lawyer who may certify that clear title can be passed on to the buyer.
Obtain ‘No-encumbrance certificate" for the past 30 years to ensure that no mortgage has been outstanding on the property to be purchased. This will also enable the buyer to ensure that the title belongs to the rightful owner who wants to sell it.

Obtain required clearance under the Urban Land ( Ceiling and regulation) act.
In the event of sale by a third party viz., real estate promoter, check whether he is the absolute owner or holds a registered power of attorney to sell the property. It is better to buy from an established developer with a unblemished record.
Seek the assistance of a registered valuer to ensure price quoted is correct market value.

Agreement and Registration

An agreement on the price to be agreed and payment terms. Payment should invariably include a clause on payment of last instalment on possession and registration
Sale deed or Agreement to sell must be executed by the seller and buyer. This should include full details and origin to the title to the property, proper identification to the property by neighbouring survey numbers, payment terms and payments made so far and cheque/ draft references. Also make sure that the buyer-builder agreements are equitable and donot contain clauses that are violative of your rights and interests.
Buyer should ensure that their right is not negated in the sale deed through undertaking additional construction in violation of the Apartment Ownership Act if the municipal bye-laws permit it at a future date.
The stamp duty varies from state to state in India. Ensure that the prevailing stamp duty is remitted. It is levied on the land value of the apartment and in some it is on the whole.
The seller on completion of the project should execute the transfer of title to the buyer by getting it registered with the local sub-registrar of properties under whose jurisdiction the propertyu is located.
While buyer’s presence is not necessary who can authorise his representative to execute the document, the seller ( this need not be the real estate promoter) must be present and transfer the title by signing the transfer deeds and all appropriate documents.

The sale deed prepared earlier is only an initial contract. Before registration, the final deed is prepared on stamp papers of appropriate value which will be the prevailing rate of stamp duty in the respective states. This set of documents should be executed by the seller.
Irrespective of the value shown in the document, the Sub-Registrar will determine the market value of the property and the stamp duly.
In case of purchase of apartments, proportionate share of the land on which the apartments are built are registered.
The price indicated by the promoter shoyuld be firm. If the promoter desires for escalation, it should be done in accordance with the procedure followed by the Government undertakings and should form part of the Agreement.
The Agreement should accompany plans, drawings and specifications of each item of work.
The Agreement should specify the completion date and the terms of compensation in the event of delay in delivering possession of the apartments

Remedy

In spite of all efforts if a buyer gets duped, a complaint may be lodged under the Consumer Protection act.1986, which is a Central Act. Representation can also be made to the Monopolies and Restrictive Trade Practices Commission ( MRTPC ) for issuing instructions for indulging in unfair trade practices
A number of states and union territories have established consumer protection councils. The redress machinery, which is quasi-judicial, has also been set-up in a number of states.

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