One of the most critical issues a buyer encounters when purchasing a real estate property is an advance payment. Advance payments for apartment purchases protect buyers’ interests.
There are several additional costs associated with purchasing a property, such as legal fees incurred during the transfer process. Real estate developers may require advance payments in different forms.
What is a buyer to do if a developer asks for an advance payment, and what should a buyer know about such situations?
The amount of the token money for the booking
Unless the potential buyer is aware that the terms and conditions of the property transaction are genuine, many property developers avoid discussing the terms and conditions of the property transaction. Oftentimes, sellers will ask the following questions to ensure a serious buyer is interested in purchasing the property:
- Deposit for goodwill
- Booking amount
- Token money
- Earnest deposit.
- Deals are discussed way before this question is asked.
There is only one meaning for the terms above; advance payment. Payment of a certain amount is required to validate the buyer’s intention to buy. Usually, a seller will request a token payment between Rs. 50,000 and Rs. 1 lakh as part of the sale.
Taxes on stamps
The law requires a buyer to pay stamp duty when purchasing a property. Nevertheless, a buyer shouldn’t rush into things. Certain property may not be of interest to you, or a seller may withdraw from the process. Your investment in stamp papers could end up being a waste in these cases. Documents such as these are non-transferable and non-refundable. Take your time when making a decision.
Payment in advance of TDS
As of June 2013, the law dictates that in India, any property sale valued at over Rs. 50 lakhs is subject to a 1% tax before the buyer can pay the seller.
In order to make sure the seller isn’t evading taxes on capital gains, the buyer must submit the Form 26QB to the government along with 1% TDS along with the PAN of both the buyer and seller. It is common nowadays to have TDS on advance payments, but you should consult your financial advisor before making any payments.
Advance payment on a home loan
Buying a pre-owned property? Pay attention! You might be taking a risk by paying an advance.
A seller of a residential property who has an ongoing mortgage could require advance payments from a buyer, which would be enough to complete the sale with all of the required documents.
In this case, the lender must provide a No Objection Certificate or a document stating that the loan has been paid off and that no pending charges are owed to the lender on the property. These payments might seem so simple, but buyers ought not to make them.
The Advance Payment: What Is It?
The term advance payment refers to a payment made in advance of a regular schedule, such as paying for a service or good before it has actually been received. Some sellers require advance payments in order to protect against non-payment or to cover any out-of-pocket costs associated with supplying the product or service.
Advance payments to suppliers: Special considerations
When a company’s orders are large enough to be an inconvenience to the supplier, it is often necessary to pay in advance to the supplier. The buyer may back out before delivery, especially if he decides to back out of the deal.
Producers who do not have adequate capital to purchase the materials to fill a large order can make use of advance payments to cover part of the cost of the product they will be creating. Producing a large order can also be used to guarantee that a certain amount of revenue will be generated. A corporation that must make an advance payment will record it on its balance sheet as a prepaid expense under accrual accounting.
Answers to some frequently asked questions
1. For token money, what does it mean?
A token amount is paid to the seller when the buyer and seller have verbally agreed and want to move forward with the transaction.
2. What amount of money should be paid as a token?
It is not clear in advance how much money should be paid as a token amount.
3. If I have a running loan, can I buy the property?
Until the existing owner pays off the entire loan amount, the property cannot be sold.
Looking for more information about property deals and how to protect your intentions when buying a house?
Visit the Ashapurna Website as there is a lot of information about projects. Talking about Ashapurna, It is the Top Developer in Jodhpur; also, they are Real Estate Developer in Jodhpur and Top Builder in Jodhpur.