Every property has a history, the papers of which become of paramount importance when being sold in the second-hand market. A resale property provides instant occupancy, already established infrastructure, and very often a lure of low pricing. But without substantial legal and financial due diligence, the buyer risks inheriting unwanted liabilities or disputes far removed from the original buying price. Some key areas that need to be assiduously cleared include title checks, encumbrance checks, lender approvals, and tax compliance.
The dynamics of the resale property market fundamentally differ from new sales. Negotiations are extremely private, prices are volatile, and the process demands active involvement of both buyer and seller.
In this blog, we discuss what is a resale property in India entails, clean transactional methods to put in place, and the associated financial and taxation considerations with such purchases so you can pursue the opportunity thoroughly and confidently to a professionally satisfying conclusion.
Table of Contents
What is a Resale Property? – Meaning & Market Insights
A resale property is any residential or commercial property that has previously been owned and occupied (or held) by an individual or entity, and is now being sold to a new buyer. Unlike primary market properties that are sold directly by the developers themselves, resale properties are traded on the secondary market.
These properties can range from fully furnished and ready-to-move-in flats to under-construction units being transferred prior to original possessio. Such properties are mostly located in established neighborhoods owing to better infrastructure and access over civic amenities with respect to newer developments.
Key Characteristics of Resale Properties in India:
- Prior ownership: The property is not brand new; it has been previously registered under some other party’s name.
- Immediate Availability: In many cases, after the sale completes, the buyer can take possession right away.
- Established Communities: Resale flats usually exist in fully developed residential societies.
- Market Price: Prices are negotiated through mutual consensus of the buyer and the seller, with consideration of market trends.
Top Advantages of Buying a Resale Properties in India
Ready for the Move-in
The strongest appeal of a resale is that buyers can inspect the flat physically before purchase. No waiting is involved; no construction delays work to the buyers’ advantage, especially when immediate possession is sought.
Established Localities
Most resale flats are situated in old neighbourhoods with infrastructure, schools, hospitals, and public transport. This gives the buyers an opportunity to view their surroundings and choose amenities based on reality and not promises.
Possibility to Negotiate
Unlike new properties, which have a fixed cost maintained by the developers, the prices associated with resale properties have room for negotiation. A good price might be secured, depending upon the urgency of the seller and the market conditions.
Reduced Financial Risk
Since the property is finished or almost finished, the buyer can avoid risk related to project delays or problems with construction, common in under-construction projects.
Step-by-Step Process of Buying a Resale Apartment
Buying a resale flat involves a whole exercise of following a systematic approach and diligent steps to realize a safe transaction while still being legally sound. Here are the steps in the process of buying a resale flat:
Identify the right property
Consult reputable property consultants or visit trusted real estate platforms to shortlist possible resale flats by location, price, and amenities. Conduct site visits to establish condition and handiness.
Important Property Documents to Verify Before Buying a Resale Property
A meticulous review of the following documents is critical:
- Title deed to confirm clear ownership
- Sale agreement
- Encumbrance certificate
- Occupancy certificate (OC)
- Approved building plan
- Property tax receipts
- Society No Objection Certificate (NOC)
It is advisable to engage a legal expert for thorough verification.
How to Negotiate & Finalize Price for Resale Property Deals
Engage in fair negotiation with the seller considering market research and property condition. Letter of Intent (LOI) is drawn upon mutual acceptance, followed by the payment of a token amount for settlement.
Agreement to Sell in Resale Property – Legal and Financial Clarity
Formal Agreement to Sell arises setting down the terms and conditions, price, payment schedule, and possession date of sale. The agreement is to be stamped and registered as required.
Home Loan Process for Resale Property – Step-by-Step Guide
If facilitating the purchase through a home loan, initiate the application with the selected bank or financial institution. Make sure to examine and ensure that the property is legally acceptable to the lender.
Home Loan Sanction and Disbursement
Following successful verification, the sanction letter will be issued by the lender. Disbursement of the home loan on resale properties usually involves:
Signing of Loan Agreement
- Submission of Postdated Cheques or ECS Mandate
- Disbursement of Funds, usually to the seller on registration/possession
Execute the Sale Deed and Registration
Final Sale Deed executed and registered at the local sub-registrar office, applicable stamp duty, and registration charges paid at this stage.
Handover and Possession
On registration and after the full payment, possession is officially handed over to the buyer by the seller. Update the utilities and society membership accordingly.
Home Loan Disbursement Process for Resale Flat in India
Since a home loan for resale property is secured under stringent checks, lenders assess not only the borrower’s creditworthiness but also the legal title of the property. This is how the disbursement for home loans for resale property is done:
- Loan Application: The bank is provided with proof of income, KYC documents, and the property papers.
- Loan Sanction: Upon due verification, the bank issues the sanction letter giving all details of the loan amount, tenure, and interest rate.
- Legal and Technical Appraisal: The bank carries out a legal examination and a technical appraisal of the property.
- Signing of Agreement: Borrower signs the loan agreement, handing over the necessary papers.
- Disbursement: The bank will release the funds either in full or in several installments, usually upon registration of the Sale Deed.
It would be wise for buyers to consider the time involved since disbursement will depend on documentation and bank processes.
What is the Tax on Resale Property?
Taxation is an important consideration when one engages in transactions of resale properties. Knowledge relating to tax obligations is important between parties involved in a sale or purchase.
For Buyers
- Stamp Duty and Registration Charges: They are state-specific levies of around 5%-10% of property value.
- GST Applicability: GST is not applicable on resale completed properties having an Occupancy Certificate.
For Sellers
Capital Gains Tax–
- Short-Term Capital Gains (STCG): If a property is sold within 24 months of purchase, the gains are taxed at the applicable income tax slab.
- Long-Term Capital Gains (LTCG): If sold after 24 months, gains are taxed at 20% with indexation benefit.
- TDS Deduction: If the transaction value exceeds ₹50 lakh, he/she would need to deduct 1% TDS from the buyer and deposit to the Income Tax Department.
It is very important for the property resale buyer to know, What Is The Tax On Resale Property in order to have financial planning and compliance.
Key Considerations Before Buying a Resale Property in India
- Age of Property: Assess expected upkeep and structural condition.
- Society Rules: Check community policies, maintenance fees, and membership requirements.
- Future Appreciation: Examine the possibility of neighbourhood expansion.
- Legal Clearances: Verify that there are no liens or legal issues on the property.
Closing Statement
Buying a resale property refers to buying property immediately, like in possession, quality locations, and the financial comfort of payment options. However, it requires a very careful and organized mode of legal verification, financial planning, and procedural compliance.
Understanding what is a resale property, carefully following the steps for buying a resale flat, and learning about home loan disbursement process for resale property and taxation can allow the buyer to take well-informed investment protection decisions.
A carefully chosen resale property usually brings long-term returns, whether for end use or investment, but with a single fine print: the transaction should be executed very precisely under professional stewardship.
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