Homeownership is a significant milestone and lifelong dream for most of us. But buying a house involves a lot more than simply paying the home loan EMIs and lump-sum downpayment. In reality, there will be a difference between the projected cost by the builder or seller and the actual cost of ownership. That’s because you have to pay additional charges when buying a house, which pushes the total cost of the property well above the quoted value. This article outlines the additional charges payable when buying a house to help you diligently plan ahead for the purchase.

• Stamp duty and registration charges are calculated on the value of the property and vary state-wise.
• Brokerage fees range from 1%-2% of the sale price.
• GST is only applicable on under-construction properties.
• Maintenance and property taxes are recurring costs.

Here’s a list of the top additional charges you must be aware of when buying a house:
 

Stamp duty

Stamp duty is a common additional charge you must pay when buying a home. The state government is responsible for levying a stamp duty. Therefore, the additional charges on home purchases vary from state to state. For instance, stamp duty on property is 5% in Maharashtra, while it is 7% in Tamil Nadu. Generally, stamp duty ranges from 5% to 8%. It is calculated on the market value or circle rate of the house property, whichever is higher. Additionally, stamp duty rates can vary depending on the type of property in question and some state governments may offer lower rates for female buyers. For instance, the stamp duty is 4% for a female owner and 6% for a male owner in Delhi.
 

Registration charges

Registration charges are the fees paid to the government to legally record the property’s ownership. Generally, the registration fee rate is 1% of the property’s market value, but since state governments levy it, the applicable rate can vary. Some offer concessional rates for female buyers.

Brokerage

Brokerage is another additional charge you have to pay when buying a house. Brokerage refers to the commission payable to the property agent or broker who assists you in buying/selling a home. Buyers pay this commission to agents for property viewing and guidance, while sellers pay it to help them secure a buyer and facilitate a smooth transaction. Generally, brokerage fees range from 1%-2% of the property’s sale price. While this does count as an additional charge when buying a house, it is subject to negotiation. Most brokers and property agents are open to negotiate for a slightly lower fee.

GST

In India, GST or the Goods and Services Tax is applicable solely to under-construction properties like flats, apartments, and bungalows. The GST payable on affordable housing property is 1%, while the rate stands at 5% for other properties. However, you do not have to worry about this additional charge when buying the house, if it is a resale property. The sale of resale flats and ready-to-move properties does not attract GST charges.

Maintenance and taxes

Most homebuyers overlook these additional charges when buying a house. However, they are quite essential to consider as recurring charges. Maintenance is the amount you, as the owner, have to pay for the general upkeep and maintenance of the building. Standard maintenance fees are collected from all property occupants in the building to meet cleaning costs, fix repairs, and pay for the building’s electricity bill. Most buildings charge maintenance even from tenants who may not be the real owners of the flat/apartment. Taxes, on the other hand, refer to annual property taxes payable by the homeowner to the local Municipal Corporation. The tax rate varies from 5%-20% depending on the valuation method used by the municipal body.

Other charges

Apart from the charges mentioned above, there are a few other additional charges you should remember when buying a house. While most may be small, they cannot be ignored. These charges include notary expenses (payable at the time of registering the property), legal fees, and parking fees for a dedicated parking space. Additionally, you must also consider the impending expense of furnishing the new home and its interior decoration costs. Another notable expense is hiring professional movers to handle the relocation to your new home.

When you find your ideal house property, avoid rushing in immediately. Instead, take a moment to consider the additional charges of buying the house. Charges like stamp duty, registration fee, brokerage, and GST can impact the final cost payable. Additionally, recurring costs like maintenance charges and property taxes can impact your long-term expenses. Consider all these charges carefully and understand how they are calculated in your state, and the applicable rates to make an informed purchase decision.

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