Do First-time Homebuyers Pay Stamp Duty Charges?

Do first-time buyers have to pay stamp duty?

Before you purchase your very first house, learn about specific criteria like stamp duties, home loans, etc. Countries such as Malaysia, England, and Ireland, among others, provide exemption, concessions, and stamp duty holidays for first-time buyers of residential property. Naturally, for the first-time home buyers in India, this question may come up – Are we also exempt from such stamp duties? But first, let’s learn more about stamp duty. 

Who are First Time Buyers?

First time home buyers are the individuals who purchase a principal residence for the first time. Thus, if you did not buy a property at any time previously, then you will be considered a first time home buyer.

What is Stamp Duty?

Stamp duty is a type of tax collected by the government on real estate transactions. As a general practice, stamp duty is paid by the property buyers. Different states have different rates of stamp duty. It is usually charged on the circle value of the property. 

Stamp duty is the state subject and is levied by the state government. Your registration document becomes valid after the stamp duty is paid to the state government. Without paying the stamp duty, you cannot claim legal ownership of the property.

How to Pay Stamp Duty?

You can pay stamp duty on the purchase of a property in the following three methods:

Physical Stamp Paper: These can be bought from the authorised seller. Necessary information is written/printed on the stamp paper. The value of the stamp paper is equal to the stamp duty applicable.

Franking: Franking is done by the authorised franking agent, like banks. Property agreement details and the stamp duty charges are printed on paper and submitted to the bank. The bank puts a unique adhesive stamp on the agreement through a franking machine.

E-stamping: Certain states provide an e-stamping facility where the homebuyers can log in to the SHCIL website and, with the help of the nearest SHCIL branch, get the e-stamp certificate.

Factors Affecting Stamp Duty

Various factors determine the stamp duty charges that are levied on a property, as discussed as follows:

  • Age of the Property: As the property ages, the value depreciates. Therefore, older buildings attract lower stamp duties as compared to newer buildings.
  • Age of the Owner: Most state governments have subsidised stamp duty charges for senior citizens.
  • Gender of the Owner: Certain states have subsidised the stamp duty rates for women home buyers.
  • Property Type: Commercial properties attract higher stamp duty than residential properties.
  • Location of the Property: The properties located in urban areas and within the municipal limits attract higher stamp duty. Conversely, the properties located on the outskirts of the city and rural areas are charged lower stamp duty.
  • Other Factors: These primarily include amenities. The government charges a higher stamp duty if you are provided with extra amenities like a gymnasium, swimming pool, clubhouse, etc. The government has a list of over 20 amenities for which you must pay additional stamp duty.

Advice for Married Couples!

Married couples usually tend to purchase their home in joint ownership. However, if the wife’s name is registered as the first owner, then the couple can claim the concession in stamp duty.

First Time Home Buyers – Stamp Duty Implication

There is no relaxation in stamp duty charges for first-time home buyers in India. They shall be required to pay an equal amount of stamp duty as they would have been paying if it was their repeat purchase.

Home Purchase – Other Implications

The other primary consideration while buying a house includes home loans. Home loans are preferred because it relieves the buyers from a significant cash outflow. While availing of the home loan, due consideration should be given to the home loan eligibility criteria and home loan interest rate.

In A Nutshell

Even though there is no relaxation in stamp duty charges for first-time home buyers, it isn’t stopping anyone from buying their first house. With affordable home loan, buyers are keen on purchasing their first home. To assist you with comparison and planning your budget, the home loan EMI calculator can help you calculate the EMI for your home loan. Start planning your first home now!