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Difference Between Market Value And Agreement Value

For the seller: for the calculation of capital gains for the seller in accordance with section 50C, the circular rate, also called the value of stamp tax, is taken into account. This will result in an additional tax burden for the seller. In the example we took, the real estate seller will have to calculate the capital gains on 72 Lakh instead of 60 Lakh (actual selling price) after the acquisition cost has been deducted. 2. Stamp duty on the reference value of the property must be paid accordingly. They can even decide on the expectations for likely capital gains on the lender. Of course, this can be annoying for anyone wishing to refinance and have access to equity or for buyers who have to deposit a larger deposit, because banks lend only a percentage (credit/value ratio) to bank valuation and not to market value. The Delhi Supreme Court has ruled that buyers of post-JC homes cannot collect a service tax on payments for the purchase of housing in the construction of contractors if the total value of the apartment contains the value of the land. Market value is essentially the price for which the property will be marketed in the current market. In Budget 2020, the government announced an increase in the threshold for the difference between the transaction value and the county rate to 10%, from 5% previously. If Rs. 42 Lakhs is the value of stamp duty and you have paid the consideration of Rs. 37 Lakhs, then the difference is necessary to add your income as income from other sources.

(a) How much value do I need to say in my sales statement? If the circular rate of the building is more than 20% higher than the value indicated in the agreement, the circular rate is considered a sales charge. This difference is imposed as capital gains in the hands of the seller and as income from other sources in the hands of the buyer. The wage value can be declared as the value on which two parties have decided to execute the transaction of the property. The value of the contract is the value indicated in the sale agreement or on which the loan amount is agreed. The registration tax and stamp duty are collected according to the value of the contract, and for the sale of the property, the difference between the sale price and the contract price is the profit for the owner. The value of the contract is the practical amount you have to pay to buy the property. The contractual value is derived from the collector`s annual guidelines. This is the minimum amount on which the deed of sale must be exported and stamp duty applies according to that value. The value of the contract is also important in another way when the value of the contract determines the asset in the client`s accounts and the value of the contract is one of the most important factors in calculating the amount of the loan in home loans.

Banks/NBFC have different eligibility criteria to take into account the value of the contract. For example, few banks consider 90% of the contract value as the maximum amount of credit that can be offered to the customer in the event of a home loan. In the case of Loan Against Real Estate, contract value does not play an important role. The current rule states that the transaction value of the property should not be less than the circular rate of more than 5%, otherwise the difference will be considered income and would result in an additional tax burden for buyers and sellers. For example, if you purchased a property worth 30 Lakhs Rs, but the district rate was 35 Lakhs, then the difference in Rs 5 Lakhs would be considered another income in the hands of the buyer and it would be taxed accordingly.

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