Buying a home is a dream come true, but purchase of immovable property at less than stamp duty value is not a good option. The official cost of property adds to your asset value and also work in your favour at the time of resale. This blog elaborates why you should not buy a home at a value lower than the stamp duty.
Definition of Stamp Duty
The cost paid to the authority at the time of purchasing a property individually is known as the Stamp Duty. This charge entitles a person to be the legal holder of the property and the process is completed according to the Stamp Duty Act 1899. This rule has a state-version too. For example, the properties in Maharashtra are registered as per the Maharashtra Stamp Act 1958.
What Law Says
Key Reasons for not buying property below the Stamp Duty Value:
Stable Prices – The Union Government has introduced various reforms to minimize black money investment in the Indian real estate. Thus, property prices are stabilizing now and hence property registration on the actual value is a wise decision. Buying a property at a lower stamp value will affect negatively when you consider selling of property at more than the stamp value duty in the future.
Low-Cost Funding – Property purchase below the stamp value duty is not appropriate as the present home loan interest rate by SBI range between 7.90% and 8.55%. Buying a property at a lower value than stamp duty is not the right decision as the multiple rate cuts by RBI in the last year have made the purchase of residential property affordable for all sections of the society. The formulation of the Benaami Act, RERA Act, PMAY Subsidy of Rs. 2.67 lacs and more are already adding value to the asset. Thus, buying a property that lesser value than stamp duty must be avoided.
Minimum Down Payment – The stable property prices have regained the confidence of the buyers and sellers. Thus, the prospects can book their dream by paying a minimum value. The minimum down payment option is available for all housing units.
The home buyer must consider all the above-mentioned points before finalizing a property purchase deal. An immovable asset always adds value to the balance sheet and thus you are suggested not to take any decision in haste as this is an important thing in life.