Advance Payment One of the most important things a homebuyer encounters while making a real estate deal is advance. Buyers’ interests are protected when they pay in advance for an apartment. 

So, what should a buyer do if a real estate developer requests an Advance Payment, and what should a buyer know about such situations?

 

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Are you looking to Buy Flat in Mumbai ?

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These issues are being discussed in this article

Amount of the reservation or a token of goodwill

Many developers will not discuss the terms and conditions of a property purchase unless they are confident in the buyer’s genuine interest. Many times, sellers may ask for the following to ensure that the buyer is serious about purchasing the property:

1. Deposit of goodwill
2. Amount of the reservation
3. Bayana

This is a question that is raised long before the actual agreement is negotiated. All of the expressions above refer to the same thing: advance payment. A buyer must spend a particular sum to confirm his or her intent to acquire. As a symbolic payment, a vendor can ask for anything between Rs. 50,000 and Rs. 3 lakh.

Duty on Stamps:-

A buyer is required by law to pay stamp duty when purchasing a property. However, one should not rush when doing so. It’s possible that you won’t be interested in a home, or that the seller may back out. In these circumstances, your stamp paper purchase might be for naught. These legal papers are not refundable or transferable.

 

TDS Payment in Advance:-

Since June 2013, a 1% tax has been taken from the total selling price before the buyer pays the seller on every sale of property valued more than Rs. 50 lakhs in India. When completing Form 26QB, the buyer must deposit this 1% TDS with the government, along with the buyer’s and seller’s PANs. This prevents the seller from avoiding capital gains taxes.

TDS, or tax deducted at source, is number one on the list of reasons why banks want advance payment in a real estate transaction. If you take out a house loan, your bank or loan provider will need you to pay the TDS in advance. In the case of TDS on NRIs under Section 195, the sum is enormous. In nearly all circumstances, the bank requires the buyer to make an advance TDS payment and present the payment receipt prior to the bank’s distribution. It’s just absurd. TDS is only required at the moment of payment, according to the rule. How can you compel a customer to pay TDS up front?

To recapitulate, the buyer is responsible for TDS compliance under the Income Tax Act. You can file a formal application with the bank, stating that the vendor is a non-resident Indian. TDS should be deducted from each payout by the bank and sent to the buyer’s account. The buyer can deposit the TDS by the deadline and present the TDS certificate to both the bank and the seller

 

Advance Payment on a home loan:-

Buyers of pre-owned properties, take note! Making an advance payment on a home loan might be dangerous.

1 bhk flat in Mumbai, When the seller of a residential property has a current home loan on the property, they may ask the new buyer to make advance payments, allowing the deal to be completed with the requisite documentation.

The lender must provide a No Objection Certificate (NOC) stating that the loan has been repaid and that there are no outstanding charges on the property. Although it appears to be straightforward, purchasers should avoid making such payments.

Registration Date:-

In most cases, the house transaction is completed in 45 to 60 days. Only a few times do the buyer and seller agree to finish the agreement in six, twelve, or eighteen months. In a few of situations, the date of registration was 2 or 3 years after the sale agreement was signed. Believe me when I say that the chance of a buyer increases when the agreed-upon registration date is after 12 months. Property registration might be delayed for a variety of reasons. The buyer needs time to arrange cash, the property is on an irreversible lease, and the seller needs more time to arrange for a stay, among other things. In such cases, the advance payment in a property transaction should be kept to a bare minimum.

In other words, the time lag between the date of the selling agreement and the date of the sale deed affects the advance payment in a property transaction. Based on my experience, the possibility of a property deal closing is just 1 out of 5 when the time lag reaches 6 months. If the seller receives a higher offer or the value of the property rises, he may back out. If the buyer believes he will get a better bargain or the property price will drop, he may back out.

 

Queries that are frequently asked

What is token money, exactly?

The token payment is paid when the buyer and seller have reached an agreement verbally and wish to proceed with the transaction.

 What amount of money should be given as a token?

There are no hard and fast guidelines for determining how much money should be paid as a token sum.

Is it possible for me to purchase the house with a running loan?

Only once the current owner has paid off the debt in full can the property be sold.

 

 

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