What Are The Advance Payments Comes With Home Buying?
The booking amount and other advance expenditures are some of the important expenditures every homebuyer stumbles upon at the time of booking a residential apartment. The booking amount for the purchase of an apartment preserves buyers’ interest.
The residential property comes with numerous other additional costs such as costs incurred towards legally transferring the asset to the name. Property builders always demand the advance from home buyers in different forms.
So, suppose a real estate developer demands the buyer for advance payment and what he or she should know about such conditions?
Here in this blog, we are discussing different types of advance payments during home buying.
Every reputed real estate developer always safeguards the interests of a home buyer and maintains complete transparency with property dealings.
Booking amount or token money
Many real estate developers sometimes avoid discussing the terms of conditions of the property transaction if they are not aware of the serious interest of the buyer. To confirm the home buyer has serious intentions towards the home buying, sellers or real estate developers may ask for:
- Booking amount
- Token money
- Expression of Interest
- Earnest deposit.
All the above-mentioned words mean the same - advance payment. A home buyer has to pay a fixed amount to confirm the intention to make the purchase. Generally, a builder may demand an amount ranging from Rs. 50,000 to Rs. 5 Lack or more as a token amount depends on the total amount of the property.
Abided by law, a home buyer has to give the stamp duty while purchasing the residential property. But, as a home buyer, you should not hurry while paying so. Because, there can be a condition when you are not so much interested in a particular property, or even the second party cancel the deal. In such circumstances, all your expenses in stamp duty could go in vain. As these legal documents are non-refundable and non-transferable, so make this decision carefully.
Advance TDS payment
From the mid of 2013, the law mandate that a sale of property value above Rs. 50 lakhs in India, a tax of 1% has to be deducted on the total sale consideration ahead of a buyer pays to the seller.
Homebuyers have to deposit this 1% as TDS to the Government along with the PAN of both parties (buyer and seller) at the time of submitting the Form 26QB. This makes sure that the seller doesn’t overlook taxes on capital gains. This 1% on advance payment is a common thing these days but you should discuss it with your financial advisor before making any commitment.