FAQ

GENERAL
1. What is meant by valuation of property?
2. How does property valuation help?
3. What is the meaning of a property's market value? Is stamp duty payable on market value?
4. What does the term 'Leasehold Property' mean?
5. What does the term 'Freehold Property' mean?
6. Are there any benefits in converting to a freehold property from a leasehold one?
7. Are there any income tax considerations while transferring newly acquired property?
8. What constitutes conclusion of sale of a property?
RESIDENTIAL
1. What is the difference between carpet area, built-up and super built-up area?
2. When there are apartments of different sizes in a complex, how is the maintenance charge calculated?
3. Why do Co-operative Housing Societies collect a Sinking Fund?
CORPORATE 1. Can corporate bodies use residential properties as office space?
2. If a property is held in the name of a company, what aspects should be clarified before purchasing it?
NRI
1. Does an NRI need RBI permission to acquire residential or commercial property in India?
2. Can foreign citizens of Indian origin acquire commercial properties in India?
3. Do foreign citizens of Indian origin require RBI permission to purchase immovable property in India for their residential use?
4. I am a person of Indian origin residing outside India. If I sell some of my property in India, am I allowed to remit the sales proceeds out of India?
5. As an NRI, can I rent out my property in India if I don't need it for immediate use?
MISCELLANEOUS
1. How is a lease agreement created?
2. What are the charges to be paid while gifting a property?
GENERAL
1. What is meant by valuation of property?
The valuation process evaluates the market value of the property. Demand and supply forces operating in the market, as well as other factors like type of property, quality of construction, its location, the local infrastructure available, maintenance, are all taken into consideration before the market value is decided.
2. How does property valuation help?
Typically, if a real estate agent is asked to judge the value of a piece of property, he would do so based on information of recent sales or purchases of similar properties in that area.
Though this may give a fair idea of the property's market value, an official property valuation would carry more weight. E.g. if you need to use this piece of property as a security against a loan, the bank's loan approval process would be faster and smoother if the property is certified by an official valuer. Many banks now insist on valuation certificates before issuing loans using properties as security. The value thus certified may also have chances of getting a higher amount of loan sanctioned.
Another benefit of official valuation is that it is a useful negotiating tool when selling the property. Such certification also becomes essential in situations where the correct value of the property has a legal bearing—such as, a will statement, insurance papers, business balance sheets etc.
3. What is the meaning of a property's market value? How is its stamp duty decided?
The price that a property can command in the open market is known as its market value. Stamp duty is based on the market value or the agreement value of the property, whichever is greater.
4. What does the term 'Leasehold Property' mean?
When a piece of property is given or 'leased' to an individual (known as the 'Lessee') for a stipulated period of time, by the owner of the property (known as the 'Lessor'), the property is referred to as Leasehold Property. A certain amount is fixed by the Lessor to be paid as lease premium and annual lease. The land ownership rights remain with the Lessor. Transfer of property requires prior permission.
5. What does the term 'Freehold Property' mean?
When ownership rights for a piece of property are given to the purchaser for a price, that property is referred to as Freehold Property. Unlike in the case of leasehold property, no annual lease charges need to be paid and the freehold property can be registered and / or transferred in part(s).
6. Are there any benefits in converting a leasehold property to a freehold one?
There are several benefits: if you convert the property to a freehold property, you become a full-fledged owner by getting the sale deed and having it registered. A freehold property has better marketability and can be sold, mortgaged or kept for standing security, which cannot be done with leasehold property.
7. Are there any income tax considerations `while transferring newly acquired property?
If the transfer takes place within three years of purchase, the income tax exemption under Section 54F of the Income Tax Act does not hold good.
8. What constitutes conclusion of sale of a property?
An agreement of sale, coupled with actual possession of the property would be considered as a conclusion of the sale. Usually, the entire amount is paid at the time of handing over possession.
RESIDENTIAL
1. What is the difference between carpet area, built-up and super built-up area?
The area of an apartment or building, not inclusive of the area of the walls is known as carpet area. This is the area that is actually used and in which a carpet can be laid. When the area of the walls including the balcony is calculated along with the carpet area, it is known as built-up area. The built-up area along with the area under common spaces like lobby, lifts, stairs, garden and swimming pool is called super built-up area.
2. When there are apartments of different sizes in a complex, how is the maintenance charge calculated?
Legally, the actual area owned by the individual is the basis for calculation of maintenance charge.
3. Why do Co-operative Housing Societies collect a Sinking Fund?
Co-operative Housing Societies have a statutory obligation to collect a Sinking Fund. This is done so that in case the building needs to be repaired or reconstructed in the future, the society has sufficient funds to carry out the work. The amount to be contributed is decided by the General Body of the society; it should be at least ¼ percent per annum of the cost of each apartment, excluding the cost of the land. This fund may be used after a resolution is passed at the General Body meeting with the prior permission of the Registering Authority. This could be to carry out reconstruction, repairs, structural additions or alterations to the building as the architect thinks is required and certifies.
CORPORATE
1. Can corporate bodies use residential properties as office space?
It is illegal to put residential properties to commercial use. However service-based industries are allowed to operate from residential areas, on the condition that they will vacate the property if any complaint is received from other residential owners.
2. Before purchasing property owned by a company, what aspects should be considered?
Before purchasing property from a company, it is necessary to verify with the Registrar of Companies that the property is not mortgaged or is not being used as a security against a loan, otherwise it is not considered a freehold property.
NRIs
1. Does an NRI need RBI permission to acquire residential or commercial property in India?
No permission is required if an NRI wants to acquire any immovable property in India, except if it is agricultural / plantation property or a farmhouse.
2. Can a person of Indian origin residing outside the country acquire commercial property in India?
Properties apart from agricultural land can be acquired by people of Indian origin residing outside India. However, the payment must be made out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers' NRE / FCNR accounts maintained with a bank in India. A declaration also has to be submitted to the Central Office of the RBI (form IPI 7) within 90 days from the date of purchase or of final payment.
3. Do foreign citizens of Indian origin require permission RBI permission to purchase immovable property in India for their residential use?
No permission is required to purchase residential property, unless it is agricultural / plantation land or a farmhouse. However, the payment must be made out of inward remittances in foreign exchange through normal banking channels or out of funds from the purchasers' non-resident accounts maintained with a bank in India.
4. If a person of Indian origin residing outside India wants to sell property in India, are sales proceeds allowed to be remitted out of India?
This is allowed if the property has been purchased on or before 26th May, 1993. But the property must be sold at least three years after the date of the final purchase deed or the date of payment of the final payment installment, whichever is later. An application (form IPI8) also has to be made to the Central Office of Reserve Bank within 90 days of the sale of the property.
5. Can an NRI rent out property in India if it is not required for immediate use?
Yes, property can be rented out in India. The rental income or income from any investment of the rental amount can also be remitted outside the country.
MISCELLANEOUS 1. How is a lease agreement created?
A lease agreement can be reached in either of two ways, depending upon each case:
• In cases where the lease contract is from year-to-year / exceeding one year's rent / reserving yearly rent, then a registered instrument can be created, which both the lessor and the lessee must execute.
• In cases other than the above, an oral agreement followed by delivery of possession is considered enough.
2. What are the charges to be paid while gifting property?
When a gift of property is made, a gift deed needs to be made by a lawyer. Stamp duty on the market value of the property also needs to be paid, as well as the necessary registration charges.
Contact :
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E-mail :  sales@thepinnacleproperties.com
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