When we are trying to zero in on our dream home, we try to ensure that the whole experience is smooth. Which is why it is very much necessary to be aware of all the processes that are involved, in order to be mentally prepared no matter what kind of a situation we are faced with.
So, let us take a look at one of the important aspect of the Home Loan process – Registration & stamp duty.
What is stamp duty?
In simple terms, it is a type of tax which is to be paid to the government at the time of registering your property. According to the Indian Stamp Act, it is mandatory to pay the stamp duty as well as the registration charges irrespective of the type of your property or its location.
The entire amount must be paid as a one time payment and is probably one of the initial steps towards purchasing your dream home. In case there is a delay in paying this, it will attract a penalty too.
What are the charges?
It is usually a certain percentage of the guideline value (and not the market value) of your property. What’s guideline value? It is the value of the property as set by the state government. What’s market value? It is the actual value which you will be paying while buying your property.
In Tamil Nadu, the Stamp-Duty charge is – 8% of the guideline value of your property.
Registration charge is – 1% .
So, when you are applying for a home loan, you might want to take into consideration these charges so that you will be able to pay for all of it, without any setbacks.
Why should I pay Stamp Duty?
It is under the State government’s law to pay for the stamp duty. It is one way to add to the revenue of the local governments. It also designates you as the legal owner of your property.
Moreover, registering your property ensures that, in future there is less chance for any kind of dispute to arise in terms of ownership or claim towards your property.
What is the process for registering my property?
The process is simple and as follows:
1. You identify the property you want to buy ( it could be an apartment, an individual house, etc).
2. Once you check out the price, you might want to start looking out for a home loan.
3. Choose a date for registering your property.
4. On the date of the registration, you will have to visit the local sub-registrar office where you will find the previous ownership details so that it can all be transferred to your name.
5. You will be required to pay 9% of the guideline value of the property. Make sure this is a one shot payment in order to avoid any penalty.
6. Registering your property in your name means to take the full legal ownership for your property and registering the same with the government.
It is a simple step as long as you are aware of the charges involved beforehand and are prepared for it accordingly.