DELHI: Sanjay Dhule is keen to sell the old flat he inherited from his parents and buy a new one in the same city. He has realised that not only is it difficult to get a buyer for the old flat, but the cost of the new one is also high. He will have to put in his own money as well, but is unsure about completing both the sale and purchase transactions seamlessly. He is also worrying about the costs and taxes that may be applicable to him. How should he manage this?
Banks may be willing to provide Dhule bridge finance to manage the sale and purchase, provided he has identified the flat he wants to buy and has initiated the sale of the existing one. If he buys a property that is still under construction and requires payment over a certain period, it would give him the time to complete the sale.
Dhule should sequence the transaction in accordance with his ability to arrange the finances. If he can get a broker or a bank to help him with the sale, he will be able to speed up the process through their networks. If he uses self-financing to pay the advance for the new property and negotiate a loan from the bank, which will be prepaid with the proceeds of sale, he may be able to get a good interest rate and loan amount. The pre-payment on sale will also help him avoid panic selling.
Dhule should ensure that he registers the sale as well as purchase, and pays the registration and stamp duties. He will also have to pay taxes to the municipality, as required. The capital gains will apply on the sale of the property, which will enjoy the benefit of indexation. He has to work out the costs, preferably with his accountant, and arrange money to pay them. With the help of his bank he should be able to manage both ends of the transaction, provided he does not end up paying or receiving cash, as is notoriously the case with property dealings.