Contrary to the popular belief, the cost of home buying is not limited to down payment, closing costs and home loan. There are several hidden fees and charges that are unavoidable if you are buying a house and are planning to live in it. In fact, to be very precise, the actual acquisition cost of a residential property is approximately 15-20 per cent higher than the cost projected by the developer. One must be prepared to bear these costs when purchasing a house, especially as unexpected burden of hidden costs can lead to a financial disaster:
Preferential Location Charges (PLC)
While many developers refrain from charging this fee, many others charge an extra Rs 10- Rs 100 per sq. ft, if you want a flat with specific view such as garden, swimming pool or kid's play area. You must talk to your builder in advance to rule out any such charges being levied.
External Development Charges (EDC)
Same as PLC, the EDC is not charged by all developers and hence it is best to discuss in detail with the builders regarding these charges and then determine on the purchase of a property sans these charges. The EDC is an additional charge that is levied by some developers if the society has areas like garden, gymnasium, swimming pool and kids' play.
Registration fee
Registration costs are compulsory and to be borne by all home buyers. It varies from state to state, and usually between 1-2 per cent of the property value. In Bangalore, registration charges are 1 per cent of property cost. Registration charge is levied by the government even if the property is not purchased and if gifted by someone.
Stamp duty
Stamp duty is a charge that is levied by the government on all documents and transactions in a state. It varies from state to state and is 5.65 per cent of the assessable value for sale deed, and it includes cess and surcharge. The assessable value of a property includes components such as saleable area value, car park value, floor rate value and amenities value.
Service tax and VAT
These two taxes are levied only on under construction properties; and while service tax is 12.36 per cent of 25 per cent value of the under construction property, VAT is charged on the construction value of the project. Together, these two taxes may cost you 8-10 per cent of the property value.
Utility Charges
If the project in which you have invested is a luxurious one, then you will have to pay extra for amenities such as club membership and car parking. More often than not, the cost of purchasing a car park area is Rs 50,000 – Rs 1,00,000 in cities such as Bangalore. Similarly, you might have to pay in advance the club membership fee for a year or two to the builder.
Maintenance Charges
Most builders collect the maintenance fee for at least two years in advance. This amount is charged for the maintenance of common amenities such as power backup, lights and parks.
The above mentioned are some of the hidden costs of buying a new home in India; however, some of these, especially the charges levied by the government, are applicable to you even if you purchase a property in the secondary market.
Source:Yahoo.com
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