Here's How You Can Sell A Property You Are Paying EMIs For

Do you plan to dispose off your property you have taken a home loan on and not paid it completely? You would require: bank's consent, this consent letter will typically provide the amount, on payment of which the outstanding loan will be fully paid off.

This amount may include the prepayment charge by your bank and should list the documents held by them that will be released on payment of the stated amount. This amount mentioned in the certificate is typically calculated as on a future date, to enable time for the buyer to arrange the payment.

The certificate becomes the key for you to negotiate the sale of your house with potential purchasers. If the new purchaser takes the loan from the seller's existing bank, the process is far simpler. Even the experts suggest that it is better to take a housing loan from the same bank where the seller has mortgaged the property as the bank will just have to examine the buyer's financial eligibility before furnishing the home loan.

If the purchaser is not taking any home loan and is making an outright payment, the new purchaser can make a cheque favouring the bank for an amount equivalent to the amount stated in the certificate. This will clear your home loan. For the balance amount, he must provide a cheque in your name. The property documents will be released to the buyer only when your have prepaid the entire housing loan.

You also need to be aware of the Tax implications accompanying this transaction. In case of selling the property within a couple of years of buying it can bring down actual profit by half and you will incur a short-term capital gains tax regardless of whether the sale proceeds are invested in a new property or not. The interest amount that has been paid will also be taken into consideration while calculating the actual gains. Under Section 80C of the Income Tax Act, the principal of the home loan can be considered as tax deduction. If the property is sold within five years of buying, the tax deduction will be reversed. If the property is held for more than three years the gains are treated as long-term capital gains and taxed at a lower rate. There is also an option of using indexation to bring down your tax liability.