Selling a house for cash in India is quite attractive to home sellers who would love to sell their house without stress and within short notice. However, selling a house to cash has some specific laws and procedures that you are expected to follow with so much care. All that you need to know on selling your house for cash in India from property value determination to the sale is covered in the guide below.
1. What is the Market Value for My Property?
To sell your house for cash, first, you should find its current market value. There are a number of ways to do this:
Professional Valuation. Hire a certified appraiser of real properties or property consultant to assist in establishing the market price that your property can command. Some factors that will be put into consideration include location and size; amenities like parks, schools, or seashores; and recently sold properties in that area.
Consult Real Estate Agents: This has been one of the most reliable sources of making estimates. The Local, Experienced Real Estate Agent becomes aware of the market trends and helps you to make proper estimates.
Online Property Portals: Surf on magicbricks, 99acres, and Housing.com. You can get an idea of prices for similar properties in your area.
The knowledge of correct market value helps you to set a competitive price, attract serious cash buyers, and avoid undervaluing your property.
2. All Documents Required for Selling
Selling in India is inclusive of executing certain documents that are necessary to verify the ownership and transmit it. Some of the important ones are:
A Sale Deed: The Sale Deed itself is an original, or its certified copy, is considered as evidence of ownership.
Title Deed: That is considered as legal evidence to prove your right to sell property.
It proves that the property does not hold any legal liabilities or mortgages.
Receipts of Property Taxes: Updated proofs of property taxes will ensure that all the taxes charged upon the property have been paid.
Society NOC: If the property falls under a cooperative housing society, take the No Objection Certificate from the society.
Thus, with these documents, the deal goes smooth and under confidence with the potential buyers.
3. Cash Buyers Identification
Cash buyers are usually real estate investors, home buying companies, or individuals who seek properties that can be moved in immediately. Here’s where to find them:
Real Estate Investors: Call local property investors and most are willing to buy any property for cash, a few dollars less perhaps.
But you can also list it on real estate platforms like MagicBricks, 99acres or Housing.com and get cash prospects. Inform everyone that the house is for sale to a cash buyer.
Social Media and Local Forums: You can try to let the word out through social media groups on Facebook or even WhatsApp groups in your locality that the house is available for cash sale.
Before considering selling to the buyer, you need to ensure that they are actually cash capable.
4. Negotiating the Cash Price
Once you find a cash buyer, you should try to negotiate the cash price. Since cash buyers are less likely to run into troubles of not being able to sell because they have cash, they would quote a lower price. Here’s how you can do it:
Be Flexible with the Price: When in a hurry to sell, a flexible price will attract more buyers.
Verify the Buyer’s Financial Status: Require proof of funds through a bank statement for you to verify that your money buyer can deposit his money. This is important if you are handling a large amount of money.
A lawyer would help you in creating terms of negotiation so your interests are secured.
5. Preparing the Agreement of Sale
The agreement of sale is legally binding as it shows the terms of the transaction. It must include the following:
• Sale Price: The agreed price for the property
• Payment Schedule: Explain the schedule of payments wherein to pay, when, and how much.
Responsibilities of Both Parties: Specify who shall be responsible for paying the registration charges, stamp duty, and other incidental charges.
Both Parties Signature: This sale deed must be signed by you and the buyer in the presence of two witnesses.
The sale deed has to be drawn on a non-judicial stamp paper and signed to avoid future litigations.
6. Registration of Sale Deed
To complete the sale, the sale deed needs to be registered at the local Sub-Registrar’s office. For which, you will need to procure the following:
Sale Deed Document: Signature of both the parties.
Identity Proof: PAN card, Aadhaar card, and passport-sized photographs of buyer and seller.
Witness: Two witnesses are required whose signature is to be taken at the time of registration of the deed.
Registration Charges: Pay the registration and stamp duty charges as applicable, which will be different from state to state.
Both the seller and buyer have to present themselves to the Sub-Registrar’s office while obtaining the registration. After that, they will pay the amount based on whatever is mutually agreed upon.
7. Tax Implications
While selling property for cash in India, there are tax implications as well. Here’s what you should consider:
Capital Gains Tax: If the property has been held for more than two years you will face long-term capital gains tax. You need to consult a tax advisor or chartered accountant to know the exact tax.
TDS (Tax Deducted at Source): If the sale value exceeds ₹50 lakh, then the buyer is liable to deduct 1% TDS on the transaction.
Invest in Capital Gains Reduction: Invest the monies in bonds or residential property within the prescribed period to reduce your capital gains tax liability.
8. Legal Provisions of Receipt of Cash Payments
Receipt of cash payments is allowed in India but it attracts certain restrictions prescribed by the Income Tax Department. Some of the fundamental points are as follows:
Cash Transaction Limit Cash transactions above ₹2 lakh in a single transaction are not allowed through the Income Tax Act. Therefore, the person should accept partial cash payments only to be within this limit.
Demand for more through banks: Instead of making the larger payments on their own, ask them to transfer it through NEFT, RTGS or even a demand draft.
All cash receipts must be recorded, as well as all cash payments, so there are no complications at filing income tax time.
Conclusion
Properly approached, the process of selling a house for cash in India can be expedient. For example, one would determine the market value, get the documents ready, find genuine cash buyers, and then simply undergo the due legal procedures that will make it smoother. Again, one could consult a lawyer and a tax advisor to get additional security and clarity into the proceedings to make your cash sale in India as smooth and hassle-free as possible.