When you’re selling a property in India, it’s natural to think mainly about the selling price and how much profit you’ll make. However, the process involves more than just finding a buyer and signing a deed. There are several expenses—some expected and some surprising—that can affect your final earnings.
Understanding these costs involved in selling a property helps you plan better, avoid delays, and ensure a smooth transaction. Whether it’s your old apartment, inherited house, or an investment flat, being aware of these charges will help you make informed decisions.
1. Capital Gains Tax
One of the most significant expenses you’ll face while selling a property is capital gains tax. The tax is levied on the profit earned from the sale.
- Short-Term Capital Gains (STCG): If you sell the property within 2 years of purchase, the gain is taxed as per your income tax slab.
- Long-Term Capital Gains (LTCG): If you sell after 2 years, a 20% tax (with indexation benefits) is applicable on the gains.
You can reduce this tax by reinvesting in another property or bonds (like Section 54EC bonds). It’s always a good idea to consult a tax advisor for clarity.
2. Brokerage Charges
If you hire a real estate agent or broker to help you find a buyer, expect to pay a brokerage fee. This can range from 1% to 2% of the selling price. For high-value properties, this cost can be substantial.
Though optional, brokers help with market pricing, buyer screening, and legal documentation, making the process easier.
3. Legal Fees
Although not mandatory, having a lawyer by your side when selling a property ensures all your paperwork is in order. Legal assistance is particularly helpful if the property has multiple owners, inheritance issues, or if the buyer is taking a home loan.
Legal fees typically range between ₹5,000 to ₹25,000, depending on the complexity of the transaction.
4. Registration & Documentation Charges
While the buyer pays the stamp duty and registration fees, sellers often incur costs for document preparation, notarization, and affidavits. These minor expenses add up—especially if the sale involves older or inherited property.
You might also need to get updated encumbrance certificates, sale deeds, or property tax receipts, which may require small processing fees.
5. Home Loan Foreclosure Charges (If Any)
If there is an active home loan on the property, you’ll need to foreclose the loan before transferring the property. While many banks don’t charge foreclosure fees on floating-rate loans for individuals, fixed-rate loans or commercial loans might have penalties ranging from 1% to 3% of the outstanding loan amount.
Get a loan closure certificate and ensure the lender releases the original property documents for smooth transfer.
6. Renovation or Maintenance Costs
Before selling a property, minor repairs or improvements can help increase its appeal. Painting, fixing broken fixtures, and cleaning can cost anywhere between ₹10,000 to ₹50,000 depending on the size and condition of the property.
In addition, pending maintenance dues with housing societies or Resident Welfare Associations (RWAs) must be cleared before the sale.
7. TDS Deduction
If the property value exceeds ₹50 lakhs, the buyer is legally required to deduct TDS (Tax Deducted at Source) at 1% of the transaction value and deposit it with the government. Though this amount is technically paid by the buyer, it reduces the amount you receive upfront. Ensure this is reflected correctly in your Form 26AS and income tax filing.
8. GST (In Select Cases)
If you’re selling a property that is under-construction, GST at 5% is applicable (for non-affordable housing). However, this is usually borne by the buyer. GST does not apply to resale of fully constructed, ready-to-move-in properties.
Final Thoughts
Selling a property is a big decision—not just financially, but emotionally too. With multiple costs involved, from taxes and brokerages to documentation and legal fees, planning ahead can save you from surprises and help you get the best value.
Always keep a clear record of your property’s purchase details, improvement receipts, and outstanding dues. If needed, hire professionals who can guide you through the financial and legal maze of property sales in India.
