We all wish that buying property in Goa could be a straightforward process where we just pay for the property but it is not so.
With real estate prices soaring, investment in real estate can end up draining your savings. However, there are ways you can be smart about your real estate investments.
There are several taxes and hidden costs associated with buying a property in Goa which you should be mindful of and consider when budgeting for your purchase.
So whenever someone says they have a budget of, for example, 1.5 Crore and want to buy a property, you have to provision for the hidden costs.
So what are the taxes and hidden charges when buying a property in Goa?
Here are some of the additional/hidden costs that should be considered when planning for buying apartments or houses in Goa:-
Now, Stamp Duty and Registration Fee are something that you cannot avoid.
Stamp duty is a compulsory fee that a buyer has to pay to the state government to get the house registered under his/her name.
The house won’t be registered under your name unless the stamp duty is paid off.
There are different slabs associated with each price bracket and it’s important to note that there will always be minor variations, little changes here and there of the Stamp Duty. It may go up or down by 0.1 % or 0.2 %
The slabs range from:
Up to 50 lakhs – 3 %
50 to 75 lakhs – 3.5 %
75 lakhs to 1 Crore – 4 %
Transactions above 1 Crore – 4.5 %
Registration Fee, just like your stamp duty, is a government tax and there’s no avoiding it.
It is the full and final legal agreement between the buyer and seller indicating change of ownership; and the court charges a registration fee for it. You have to pay it but unlike the stamp duty it is a standard 3 percent.
Registration Tax: 3 %
So let’s take an average transaction of 1.5 Crore.
We generate a Stamp Duty of 4.5% + the Standard Registration Fee of 3% = 7.5 %
7.5 % of 1.5 Crore is equal to Rs. 11,25000 which is what you have to pay to the government.
Now that you have stamp duty, registration out of the way here are the other costs and taxes that you need to know.
GST is charged for the purchase of any under-construction property in Goa as is a mandatory tax paid to the Indian government just like stamp duty and registration fee.
The GST on under-construction property in Goa is around 5%, while for affordable housing projects it’s only 1%. There is no GST on ready to move properties or on those projects which have got the completion certificate.
While not exactly a hidden cost, the Brokerage Fee is one of those charges that you can be forgetful about while buying a house.
As the name suggests, it is a fee charged by the broker – the person who is the middleman between the buyer and the seller.
This fee is around 2% of the total house cost; however, some brokers can be expensive and may charge a higher fee.
So for a 1.5 Crore flat, this 2% brokerage cost is equal to Rs. 3,00,000 added to the base cost.
This brokerage fee of 2% added to the stamp duty and registration fee brings the cost to almost 9.5 % or Rs. 14,25,000.
Maintenance deposit is what you’ll have to pay to the builders as an advance towards the maintenance of the building and its amenities for up to 2 years.
For upcoming and newer buildings, maintenance deposits can last from 2 to 10 years so the builders get enough capital to reinvest in the construction of the property or buying property in Goa.
In existing buildings, the deposit is charged by society members in case of any damages that occur in the future.
This amount includes common amenities, parks and lighting, clubhouse membership, security guards in the society, maintenance of roads within the housing-society, etc.
All this can get quite big depending on the number of amenities provided.
A lawyer would charge you around Rs. 15,000 for a title report which may go up to Rs. 20000.
The lawyer will charge you for drafting a sale deed, roughly say Rs. 50000 which includes execution, talking to the sub registrar and fixing a date. All of it amounts to all that is about 50000.
They may also sometimes ask you for Rs. 5000 just to smooth things out so that’s included here too.
Then you might have to spend Rs. 15-20000 for your Newspaper Ad, for which you have two reputed Goan newspapers The Navhind Times and Herald who cover pretty much the length and the breadth of Goa.
So in total Legal Fees will approximately cost you around Rs. 1 Lakh.
Finally, we have something that’s important and that is TDS (Tax Deducted at Source)
Goa being the way it is, you’ll have a lot of Goans who have migrated to foreign countries but have property here under their name.
So let’s say for example we have Mr. Kapadia from Delhi, who comes to Goa and finds an old Portuguese house and knows the owner, let’s say is Mr. D’Souza who is Goan and has taken Portuguese or British nationality, who wants to sell it to Mr. Kapadia.
This process will not be as simple because the sub registrar will ask you for a TDS certificate and the tax deducted is almost 20 % so 20.83 to 20.84 percent is what the tax will be.
This is something most people don’t realize and they, especially the buyers and the sellers, are so eager and excited to close the deal and then at the last minute they come up with this hurdle and then the seller has to book his ticket back and the deals actually fall through.
So if you’re an OCI (Overseas Citizen of India) holder or a PIO (Person of Indian Origin) you are liable to pay a TDS of 20 and it goes up to 20.83 to 20.84, so you need to make a provision for that.
You don’t need to pay directly, what happens in our example is the buyer, Mr. Kapadia, comes and pays it on behalf of Mr. D’Souza prior to the sale deed downloads the Challan saying that look i’ve paid on behalf of Mr. D’Souza with Mr. D’Souza’s PAN number and he attaches that to the sale deed and then the sub register sees that he has paid a fair amount and accepts the sale deed and registers it.
Without this the sale deed cannot be registered. If it is registered it can be called back due to an issue with FEMA (Foreign Exchange Management Act) which can have major consequences.
But what happens if you’re buying it from two people, say husband and wife where the husband is Indian and the wife is from a foreign country?
What are the taxes and TDS here? It’s 50 %
So let’s say the property is 5 crores, the TDS on 2.5 Crores, which is the wife’s share, you have to calculate 20 % or 20.84 % on that 2.5 Crores
Whereas, it is a standard 1 % for the husband’s share.
20.8% on 2.5 crores (Wife’s share)
1% on 2.5 crores (Husband’s share)
Remember to always provision for TDS, especially if it is an OCI that you’re buying from.
Check their Nationality. Sometimes people when they own a property or when they’ve bought it, they’re Indians, but when they transition and take nationality or citizenship of another country, it’s not mentioned in the sale deed.
Now in this case you could take the risk and avoid it, you could say Indian national but you could fall into trouble.
Now for those of you who have paid the TDS remember it’s not a fee that disappears from your pocket so you can claim it next year or the year after that.
You should talk to your chartered accountant and you can reclaim that money.
To wrap up, we have a 10 % standard fee, standard tax, standard extra costs that are associated with buying a home in Goa.
This 10 % includes your stamp duty, your registration fee, the lawyers fees again that’s not a tax but that’s a hidden cost.
Now if you’re buying old property in Goa there’s always going to be a tax. So whenever you do your due diligence, ask for the house tax receipt because over there you will see a minimal amount.
For example, if it’s an old Portuguese house, the house tax receipt will show a range somewhere around Rs. 500 to Rs. 600 a year, that’s a small amount but it’s still a tax.
Then you have a Garbage tax and other small taxes and fees here and there that are associated with the Panchayat, cleaning so on and so forth that you need to check.
These are nothing big, nothing major, nothing as heavy, as voluminous as the stamp duty or the registration but still should be accounted for in your cost breakdown.
Then you might also have to do a survey of your property so that’s about Rs. 4 to 5 per square meter.
So all in all you take all that into account plus your subsequent mutation which is transferring in the government records from the person you want the property from to your name, not just a mutation of the land but also electricity and water.
All this adds up to 10% of the value of the property. So if you bought a property in Goa for 2 Crores, is it going to cost you 2 Crores? No, it’s going to cost you Rs. 2,20,00,000 (2 crores 20 lakhs). Make sure to provision all of this in your budget for the 10 % additional amount that you will spend when buying property in Goa.
For flats and houses which are under-construction, there will be some hidden costs
that may not be apparent at the time of booking the property. These include:
When in the process of buying property in Goa, one also needs to take into account other costs that may not necessarily be taxes or fee related but which you’ll have to incur if you’re not mindful of these things.
Hidden Defects in Houses
It doesn’t matter if you are buying a new property, they still can have hidden or masked defects for which you may end-up spending a hefty amount.
These can be related to waterproofing or grading which lead to leakage or flooding during the rainy season, weak slabs that could crack, etc.
Wooden floors could be stained, toilets could overflow, electrical wiring could be badly done, all the things you don’t want in an older home could occur in a brand-new house.
Make sure to have a thorough inspection done by an independent home inspector at multiple instances to ensure that your new house has little to no flaws.
Credibility of the contractor and builder has to be taken into account before you make a purchase and end up spending more than expected.
Missing Indoor & Outdoor Necessities
Not all houses and flats come fully furnished and it’s common to find missing amenities such as indoor appliances, outdoor decks, fencing and landscaping, etc.
All these missing items could be a major additional expense that dents your pockets.
Before you propose an offer,make sure to ask what all is included in the price of your house and what all is missing.
If you can’t find a new flat with all the necessary amenities, you do have the option of living in a previously owned house where the previous owner has installed all the missing necessities.
Extra Cost of Upgrades
In continuation with the above point, you might be prompted to buy several improvements that the interior designer has to sell, and these range from hardwood floors, granite counters, modular kitchen sets, etc.
All these add up to the base price of the flat which you originally thought would be the final price and you end up spending an exorbitant amount of money.
Make the right choice when deciding whether you want pre-made selections or want to make improvements yourself as this will certainly affect the flats future resale value.
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