Costs Involved While Selling a Property

It could appear that the buyer is in charge of the majority of the costs associated with a real estate transaction. Nevertheless, there are a number of costs involved while selling a property. Knowing these expenditures will make it easier for you to plan ahead for them and determine your actual profit from the deal.

• Repair and remodeling costs – In order to make the property useable for the buyers, you may need to perform repairs to the fixtures (such as plumbing or electrical) in accordance with the sale agreement. Additionally, you might need to carry out remodeling work in your home to set it apart from competing houses throughout the sale process. Examples include installing a modular kitchen, repainting the walls, or updating the brand of fixtures. Depending on the size of the home or the sort of materials utilized for the refurbishment, these prices could reach Rs 2-4 lakh.

• Advertisement – You might need to use paid advertising strategies to speed up the customer search process.

• Brokerage – If you hired a real estate broker to help you sell your property, you must pay a commission to the broker for the services rendered. This expense increases to one to two percent of the property’s final sale price (at which the property is being sold to the buyer). Brokers may have the option of charging a flat fee rather than a percentage. These fees differ for each broker.

• Capital gains tax – Depending on how long you’ve owned the relevant property, you may be subject to capital gains tax. If you decide to sell the property after keeping it for more than two years (starting from the day it was purchased), you will be subject to long-term capital gains tax (LTCG Tax). Gains on the sale of the property are subject to this tax, which is paid at a rate of 20%. You will pay short-term capital gains tax on any property you sell that you owned for less than two years. This is taxed according to your income bracket. Click here to find out more about capital gains tax calculation.

• Foreclosure Charges – these charges are associated with foreclosure include the hasty or full repayment of the outstanding loan balance through EMIs that are greater than those initially agreed upon, or through a single payment. Your bank might require you to pay foreclosure fees if the property in question was purchased using a home loan and you intend to prepay the remaining loan balance before starting the selling procedure.

For customers who have taken out loans with fixed interest rates, lenders charge between one and four percent of the prepayment amount. To understand the procedure and the precise amount due, you should carefully examine your loan paperwork and consult with a representative of the lending firm. You are immune from foreclosure fees if you have a house loan with a fluctuating interest rate.

• Lawyer’s fee – If you hired a lawyer to advise you on all the paperwork and taxes involved, you would be required to pay them a fee. This also changes depending on the specific attorney.

• Transfer taxes and recording fees – You would have to pay taxes to the State government or the local authorities in order to have the title changed from your name to the buyer’s name. To prove that all debts owed on the property have been settled in full and there are no outstanding obligations, the recording fee must be paid.

• Notary fees – The notary will charge a fee in order to review all the property paperwork and make sure they are correctly executed during the transaction.

These are all the expenses a seller could have during the selling process. Spend some time quantifying each one to determine the entire cost so that you may make the necessary financial arrangements.

Disclaimer: The opinions shown above are mainly for informational reasons and are based on market research. Deal Acres is not responsible for any actions made as a result of relying on the provided material and makes no representations as to its accuracy, completeness, or reliability.