Starting the process of buying a house is an exciting journey, but it’s also a financial commitment that involves a web of advance payments. From the moment you decide to invest in your dream luxury home in Mulund to the final closing of the deal, these payments play a crucial role in shaping your real estate transaction.
Let’s explore some of the basic types of advance payment that can help clinch a deal with the real estate developer. Understanding these financial intricacies is not only vital for a successful property purchase but also for ensuring a secure and compliant real estate investment. Let’s explore the various types of advance payments you might encounter while buying your residential property in Mulund.
Token Money/ Booking Amount
Token money, also known as booking amount, is a small initial deposit made by a potential homebuyer when expressing their serious interest in purchasing a residential property in Thane or Mumbai. This sum is typically a fraction of the property’s total price, and its primary purpose is to demonstrate the buyer’s commitment to the transaction and temporarily reserve or block the property.
Once the token money is paid, the property is usually taken off the market temporarily, giving the buyer some time to complete due diligence and formalize the purchase agreement. In the event the deal doesn’t proceed, the token money may be forfeited or partially refunded, depending on the terms agreed upon.
Stamp duty is a compulsory tax imposed by the government on property transactions when purchasing a house. It is typically paid as a part of the advance payment during the property purchase process. The amount of stamp duty is calculated based on the property’s value and varies from one location to another. For instance, the stamp duty for a 1 bhk property in Thane would be different to a 1 bhk property in Mulund. Since the stamp duty rate differs in different properties, always ask the developer to check the price at the sub-registrar office.
Advance TDS Payment
According to the law, the responsibility of deducting a tax of 1% from the total sale amount falls upon the buyer when purchasing a property. Notably, this deduction can only be initiated by the buyer, and it applies when the sale price exceeds 50 lakh INR. The buyer is required to remit this 1% TDS to the government, while also furnishing essential information, including the PAN details of both the buyer and seller, through the submission of Form 26QB
It is advisable to consult with the financial advisor before making the final payment.
Advance Brokerage Payment
Advance brokerage payment is a common practice when purchasing a house through a real estate broker. Real estate brokers typically charge a percentage of the property’s value as brokerage fees in advance. This payment is made to secure the services of the broker and ensure their commitment to facilitating the home purchase process.
While buying an upcoming property in Thane or Mumbai, understanding the various advance payments that will be involved is important for a smooth transaction. From token money to advance TDS and brokerage fees, each payment serves a specific purpose and helps streamline the buying process. It’s essential to be well-informed about these financial aspects and always buy your property from reputed real estate developers in Thane or Mumbai.