House Buying Tips: If someone has his own house in a city, it has a different meaning. Buying a house is everyone’s dream right from the beginning. People work very hard for this. They collect a lot of money. Then with great difficulty they are able to save enough money to buy a house. People pay attention to many things while buying a house. Like where is the place, how is the structure of the house.
What is its price? Some Indians who have settled outside India want to sell their property in India as well. If you are also buying a house from such an NRI, then you have to keep some things in mind because a house is not bought every day. A small mistake in this can cause you a loss of lakhs and crores.
If you buy a house from an NRI, keep these things in mind
While buying property, you have to follow Indian laws. If you buy property from an Indian citizen, then there are different rules for it. On the other hand, if you buy from an Indian who is settled abroad, that is, who is a non-resident Indian, then you have to follow some rules of the Income Tax Act of India. The process has to be completed under that. In the case of buying property from an NRI, the paper work and the rest of the process is a bit difficult.
Understand the rules regarding tax
The taxation process is different from the normal one when buying property from an NRI. Under Section 195 of the Income Tax Act, if you buy property from an Indian, you have to pay one percent tax. On the other hand, if you buy immovable property from an NRI, you have to pay 20% tax. If property worth up to Rs 50 lakh is purchased from an Indian, then no tax has to be paid.
But if a property worth less than 50 lakhs is purchased from an NRI, then 20.80 percent TDS has to be paid, 22.58 percent TDS has to be paid for a property worth 50 lakhs to 1 crore. Whereas 23.92 percent TDS has to be paid on a property worth one crore. If the NRI does not pay the tax, then the department recovers the outstanding tax from the new owner of the property at an interest rate of 12%.
It is necessary to get TAN made
When you have to buy a property from an NRI, it is necessary to have a TAN (Tax Deduction and Collection Account Number) for TDS deduction under Section 195 of Income Tax. If you deal in property and TDS is deducted without TAN, then you can be fined heavily by the Income Tax. If someone else is a partner in the property with you, then it is necessary for him/her to also have a TAN.
Malik asked to stay in India till property deal is finalised
Until your property deal with the NRI is completed and its registration is done, you should ask the NRI owner of the property to stay in India so that he can be present before the registrar. But if he is not present at the registrar’s office during the deal, then you should find out to whom he has given the power of attorney to finalize the property deal.
Do not make full payment to a single owner
When you are buying property from an NRI, you should find out how many owners the property has because if any dispute arises later on regarding the property, you may face difficulties. That is why find out all the owners and give equal share of payment to all of them. Keep the details with you. Giving the entire payment to only one owner may lead to legal troubles in the future.