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Faq's on Real Estate

What is the meaning of a property's market value? How is its stamp duty decided? What is the meaning of a property's market value? How is its stamp duty decided?

The price that a property can command in the open market is known as its market value. Stamp duty is based on the market value or the agreement value of the property, whichever is greater.

What does the term 'Leasehold Property' mean? What does the term 'Leasehold Property' mean?

When a piece of property is given or 'leased' to an individual (known as the 'Lessee') for a stipulated period of time, by the owner of the property (known as the 'Lessor'), the property is referred to as Leasehold Property. A certain amount is fixed by the Lessor to be paid as lease premium and annual lease. The land ownership rights remain with the Lessor. Transfer of property requires prior permission.

What does the term 'Freehold Property' mean? What does the term 'Freehold Property' mean?

When ownership rights for a piece of property are given to the purchaser for a price, that property is referred to as Freehold Property. Unlike in the case of leasehold property, no annual lease charges need to be paid and the freehold property can be registered and/or transferred in part(s).

Are there any income tax considerations while transferring newly acquired property? Are there any income tax considerations while transferring newly acquired property?

If the transfer takes place within three years of purchase, the income tax exemption under Section 54F of the Income Tax Act does not hold good.

What constitutes conclusion of sale of a property? What constitutes conclusion of sale of a property?

An agreement of sale, coupled with actual possession of the property would be considered as a conclusion of the sale. Usually, the entire amount is paid at the time of handing over possession.

What is the difference between carpet area, built-up and super built-up area? What is the difference between carpet area, built-up and super built-up area?

The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.

When there are apartments of different sizes in a complex, how is the maintenance charge calculated? When there are apartments of different sizes in a complex, how is the maintenance charge calculated?

Legally, the actual area owned by the individual is the basis for calculation of maintenance charge.

Why do Co-operative Housing Societies collect a Sinking Fund? Why do Co-operative Housing Societies collect a Sinking Fund?

Co-operative Housing Societies have a statutory obligation to collect a Sinking Fund. This is done so that in case the building needs to be repaired or reconstructed in the future, the society has sufficient funds to carry out the work. The amount to be contributed is decided by the General Body of the society; it should be at least ¼ percent per annum of the cost of each apartment, excluding the cost of the land. This fund may be used after a resolution is passed at the General Body meeting with the prior permission of the Registering Authority. This could be to carry out reconstruction, repairs, structural additions or alterations to the building as the architect thinks is required and certifies.

How is a lease agreement created? How is a lease agreement created?

A lease agreement can be reached in either of two ways, depending upon each case: • In cases where the lease contract is from year-to-year/exceeding one year's rent/reserving yearly rent, then a registered instrument can be created, which both the lessor and the lessee must execute. • In cases other than the above, an oral agreement followed by delivery of possession is considered enough.

What are the charges to be paid while gifting property? What are the charges to be paid while gifting property?

When a gift of property is made, a gift deed needs to be made by a lawyer. Stamp duty on the market value of the property also needs to be paid, as well as the necessary registration charges.

What is meant by valuation of property? What is meant by valuation of property?

The valuation process evaluates the market value of the property. Demand and supply forces operating in the market, as well as other factors like type of property, quality of construction, its location, the local infrastructure available, maintenance, are all taken into consideration before the market value is decided.