Most important things NRI's should Keep in mind while selling their property.
Selling a property in appropriate market conditions gives Owner huge capital gain. However, there are various factors that need to be considered even before looking for a buyer. Ignorance of small important things might lead to unnecessary delay and even cancellation of the deal. Whereas on other hand if Owner is aware about the entire process and follow below steps, selling property becomes much easier.
Step 1 – Collect all Original documents in place.
This is very important if Owner is planning to sell his property. Original documents are needed at various stages of selling your property. We require them to submit in Banks, Society Office, to Advocate and CA etc. Not only this valuation of the property (Amount at which we can sell the property) can be obtained from Original Documents only.
NRI’s should make sure that they hold all documents with them. If it is with someone in India then they can ask for scanned copy of the documents and keep with them.
If Owner has paid off all his loan then he should collect loan closing letter from Bank. If the Loan is pending then buyer’s bank will deduct loan amount from the selling amount and then transfer to the seller.
In such situations where Bank and loan is involved many times Original documents remain with the Bank. In such situations it is better to get in touch with Bank authorities and understand the proceedings related to documents.
The list of documents which would be required is as follows:-
a. Index 2 of the property b. Sanction Floor Plan
c. Society Completion Certificate d. Share Certificate
e. Society Registration Certificate f. Parking Allotment letter
g. Previous Sale deed h. Owner’s Pan Card
i. Owner’s Aadhar Card j. Owner’s Cheque book
k. Valuation Report of the property l. Possession Letter
Step 2 – POA Process
For all the NRI’s it is very important to handover the POA to someone here in India if you are not planning a visit at the time of execution of Agreement.
If you have already given the POA then make sure you get it thoroughly verified from the Advocate and bank. Because rental POA’s do not stand valid while signing the sell agreement.
If you have not given the POA then you will have to execute a new POA in the name of anyone trust worthy here in India so that the local person can do documentation on your behalf.
Step 3 – PAN Migration
For all the NRI’s owning a PAN Card it is necessary to check the address mentioned in the PAN Card. It should be of the property which Owner wants to sell. In case the addresses are different then Owner has to get the PAN Migrated. For this Owner can get in contact with the CA (Chartered Accountant). Owner has to submit his Pan Card, Passport, Bank Statement (Of NRO Account) to the CA.
This entire process requires entire 30 days time.
Step 4 – Lower Deduction Certificate or TAX exemption Certificate.
All NRI’s have to pay TDS on selling amount to the government at the time of Property Sale. If the property is in the name of more than 1 person i.e. more than 1 seller, than separate TDS has to be paid by each seller individually.
Before going ahead with property sale 2 points should be considered by Owners.
a. Type of Capital Gain from Property Sale i.e. Short Term Capital Gain or Long Term Capital Gain
b. Whether Owner is willing to pay capital gain tax or would like to save capital gain tax by Reinvestment of capital gains.
The Capital Gain will be a Long Term Capital Gain if Owner holds the property for more than 36 months. If the period is less than 36 months then it is Short Term Capital Gain. The TDS is around 22.6% if it’s a Long Term Capital Gain.
To reduce the percentage of the TDS Lower Deduction Certificate is required. Owner can contact his CA for this certificate. Average time required to complete this process is around 45 days.
If Owner plans to reinvest the Capital Gain or the selling amount then Owner can apply for TAX Exemption Certificate. In this case he will not have to pay any taxes to Government.
Step 5 – To Collect Loan Sanction Letter from Buyer
This is the biggest mistake which an Owner does while finalizing a client. It is important to know whether the Loan of the Buyer is sanctioned or not. Many times deal gets cancelled after 2 -3 months only because of Buyer’s Loan and Owner ultimately faces a loss of interesting prospects in this time span.
Step 6 – Get MOU Signed (Memorandum of understanding)
Once the Owner receives the token amount (Confirmation from the Buyer), it is very important to get the MOU signed between Owner and Buyer. This memorandum should compulsorily consist of the Selling amount that Owner and Buyer have mutually agreed upon. MOU should also summarize other details related to the deal. This MOU document reduces any future disputes between both the parties. Sometimes Bank also ask for MOU Document.
For MOU Owner can contact his Advocate. This process takes around 2-3 days.
Step 7 – Society NOC
It is very important to take NOC from the society for selling the property. For society NOC Owner has to submit all the documents and address proofs as per society’s requirements to the society.
It is suggested to get in touch with the Society Manager and understand the requirements of the society before acting. Owner might have to deposit some amount in the society as per society’s rules and regulations.
Step 8 – Sale deed or Agreement to sale
After all the Documents and NOC is received Owner can execute the Agreement to Sale or Sale deed. The format of the Sale agreement or Sale deed is standard and can be executed with the help of any trusted Advocate.
The document list required for sale deed is as follows
a. Society Registration Certificate b. Index 2
c. Agreement to sale between builder and buyer d. Possession letter
e. Registered POA (Approved from Advocate and Bank) f. Parking Allotment letter
g. Share Certificate h. Latest Tax paid receipt
i. Latest MSEB paid receipt j. Society NOC
K.POA holder ID proof l. POA holder Aadhar Card
m. POA holder Pancard n. Passport size photos
o. Loan closure letter p. Sanction floor plan