What is included in cost of Property?
Bricksnwall Trusted Experts
What is included in the entire price of Indian real estate The final product is the result of many factors coming together to determine the final cost of the property when you buy one. We call these components "property costs." Many people are aware of certain things, such as the cost of constructing, land, and materials, but many others are not.
Purchasing a home is an intricate process with many moving parts that raise the final cost. To understand what makes up the entire cost, you must first be aware that the basic selling price (BSP) includes two main cost components.
Undivided share (UDS) of the land, plus the cost of construction materials and labor.
Every unit in a housing society is allotted a certain plot of land or UDS. The name of the apartment's owner appears on this share. As a result, the land, labor, and materials needed to build the apartment are also costs associated with purchasing an apartment.
After that, there are a few further costs, bringing the total expenditure up to about 25%. Other financial considerations must be made when buying a house.
Charges for Preferred Location (PLC)
PLC are evaluated "per floor, per square foot" for every unit at sites with a competitive edge over others. For instance,
A corner flat or one with a view of a major street, park, or golf course will go for more money than other types of apartments. Ground and above-ground levels are more expensive in Delhi NCR because lower floors are more in demand. Because higher floors are preferred in Mumbai, the PLC grows as one ascends. These charges are typically not hidden.
Parking
Developers continue to demand outrageous fees for covered parking spaces, ranging from Rs2 lakh to Rs 5 lakh, in spite of the 2010 Supreme Court ruling.
PLC are evaluated "per floor, per square foot" for every unit at sites with a competitive edge over others. For instance,
A corner flat or one with a view of a major street, park or golf course will go for more money than other types of apartments. Ground and above-ground levels are more expensive in Delhi NCR because lower floors are more in demand. Because higher floors are preferred in Mumbai, the PLC grows as one ascends. These charges are typically not hidden.
Monthly Maintenance Deposits & Fees
In order to maintain their array of amenities, housing associations must pay a maintenance fee. The first maintenance deposit is something you have to consider when purchasing a home. Deposits can be settled on a monthly basis or for a period ranging from one to ten years. If it is a one-time charge, after the initial deposit is depleted, the maintenance fee becomes an ongoing cost that needs to be paid either monthly or annually. Additionally, an 18% GST is applied if the monthly maintenance costs exceed Rs 7,500.
Club Involvement
Clubs within housing societies are becoming more and more common. This service isn't provided for free, though. To join, you are expected to pay a one-time fee for a predetermined period of time. As a result, the cost of club membership itself decreases with time.
Charges for Using Public Spaces
The amenities that the builder included, including backup power, water, and fire protection, raise the price of the property. When a home is bought, the builder evaluates the Fire Fighting Equipment Charges (FFEC) and External Electrification Charges (EEC). Even after paying the EEC, you still need to pay for the electrical connection from the electricity board.
Infrastructure development and external development Charges. (IDC and EDC)
Roadways area form of infrastructure and the developer is required to pay these fees to the state government for the physical development of the areas surrounding the project. However, consumers eventually bear the brunt of the expense.
In addition to the costs you pay the developer, there are other expenses in the form of taxes that the government levies at the time of purchase.
Goods and Services Tax, or GST
Without an input tax credit (ITC), all residential properties costing more than Rs 45 lakh that are still under construction are subject to an effective GST of 5%. Affordable housing, defined as a home under Rs 45 lakh, is subject to an effective GST rate of one percent. Affordable dwellings are defined as those with a value of up to Rs 45 lakh and up to 90 sq m in non-metropolitan cities or towns or 60 sq m in metropolitan areas.
Registration Fees
This is one of the most important turning points in the home-buying process. To be the legitimate owner of a property, you have to register it with the registrar's office. For this purpose, payment of stamp duty and registration fees is required.
The market value is the reference value, also known as the circle rate, that the government sets for each place. This is the lowest sum that can be used to register a property, and consequently, the lowest amount that can be used to pay stamp duty and registration costs. In certain states, stamp duty rates may be lower for women and people living in rural areas.
The Service Tax and VAT
When buying under-construction properties or units without a Completion Certificate(CC), service tax was charged to the builder's construction services prior to the introduction of the GST. A service tax equal to 3.09 percent of the total cost of the property was demanded from buyers of homes smaller than 2,000 square feet or less than Rs 1 crore. For homes costing more than Rs. 1 crore or more than 2,000 square feet, the tax rate was 3.71%.
Certain states (Karnataka and Andhra Pradesh)additionally imposed a 1% value-added tax(VAT) on the total cost of the property. However, both of these payments have now been included in the GST.
It's critical for first-time homebuyers to be aware of any potential additional costs associated with their real estate transaction and to have the ability to bargain over the price.
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