A land is a scarce and valuable resource. It price seems to go up over the period of time. The limited supply of a resource will make it a profitable investment. However, some investors need to avail a land loan considering the rising prices of real estate. It can be a real profitable investment nevertheless. However, buying land is an exhaustive venture. You cannot undertake it without knowing quite a few titbits about land loans, documentation and more. This article is a great starting point to discover what you need to know about land purchasing.
Maximum numbers of legal disputes in India are related to land. Buying land, especially with a land purchase loan, necessitates due caution. Every housing finance company you approach for a plot loan will ensure that its dispute-free land but so should you. The most common legal hassles for a plot include claims of heirs, land boundary disputes, government projects, agricultural land, etc. So, get a local lawyer to ensure that land is dispute-free.
Buying land is more complicated than buying home. The list of documents is extensive. This is especially applicable if you are buying land with a land purchase loan. Approach you lender and get a list of documents required for a plot purchase loan. Gather the requisite personal and land-related documents. Then, submit the plot loan application. You cannot rush this process. Here is a basic list of documents required for buying land.
* 7/12 document: title and proof of rights
* 6/12 documents: previous land transfers
* 8/A: details of land revenue tax, etc.
* Encumbrance certificate
* Release certificate
* Survey sketch
* DC certificate
Land buying involves several kinds of taxes. Land as an asset is considered non-productive. But, if you own more than one house/flat/plot, you will need to pay 1% wealth tax, if the net worth (after adjusting respective liability) is more than Rs. 30, 00, 000. This can affect your bottom line if you have purchased it as an investor. In addition, a plot purchase loan does not have any kind of income tax rebate. So, if you plan to buy land and sell it at a higher cost with a loan for a land purchase, you cannot avail any income tax exemption.
Plot purchase loan:
If you avail loan for land purchase, you will need to focus on the following:
* Get the documentation right.
* Prioritize land loan interest rates.
* Loan to value ratio for plot loan can go as high as 80%. So gather due funds for down payment.
These basics of land purchase should help you identify a right piece of land and right lender accordingly.
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