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Why Stamp Duty And Property Registration Charges Are Important?

Are you planning to buy a property in London?

Congratulations, for finally taking the plunge. Well you may have drawn a tentative budget of various expenses. Did you consider including stamp duty and property registration charges while buying a property in London.

So, what are stamp duty and property registration charges are required for?

Importance Of Stamp Duty



The Stamp Duty is a charge payable for the sale agreement. Whether you pay it during the process or after the process, it totally depends on the person you have hired.

It is known to be one of the most important documents that provide the legal status of the property transaction.

This processing charge varies from 4% - 8% of the entire property cost. The cost depends on the factors that include the location of the property, type of property, status, and gender.

On the other hand, property registration charges are 1% of the total registered property value.

How to calculate stamp duty and property registration charges?



Stamp duty is a state subject and hence fixed by the state government. The stamp duty rate totally depends on the state you are purchasing the house in.

Generally, in London, the buyer usually pays stamp duty of 0% on the first £125,000. For the next £125,000, you will have to pay 2% which is £2,500. On the final £25,000, you will be paying 5% which is £1,250. So, if the property total price is £275,000, then you will have to pay £3,750 as a stamp duty charge.

Process of paying stamp duty and property registration charges



Both of these stamp duty and property registration charges can be paid in the sub-register’s office through following ways….

* Purchase of stamps from the authorized stamp vendors.

* Purchase of adhesive stamps.

* Payment through the government via DD/pay order issued by any nationalized bank / scheduled bank.

* Documents can be written on plain paper and stamp duty charges can be paid through DD or pay order issued by any nationalized bank within two months of the date of execution of documents certifications by jurisdictional district or by the sub-registrar office.

Tax benefits availability on stamp duty and property registration charges



The tax benefits totally depend on the country. Generally, there are certain limits and within this, you can avail that benefit. However, there are conditions that come along.

These conditions include….

• All the deductions are only valid for new property sale and not for resale property.

• Only the assessee is authorized for the tax benefits both on these stamp duty and property registration charges. Accept the assessee, any other member from assessee’s family will not be able to avail tax benefits.

• Tax benefits can only be claimed for ready to move in properties.

• Tax benefits are valid for residential property and commercial properties do not come under the purview of this.