India Real Estate Dictionary

Increase in property value over time due to location, infrastructure development, demand-supply dynamics, and inflation. Often cited as investment return on real estate.

A promise by developer to pay a fixed return (rental or otherwise) to buyer during construction period. Extensively used as a sales tool but carries high risk if project is delayed or developer defaults.

Initial sum paid by buyer to developer to reserve a specific unit. Typically 10–15% of total cost. Constitutes the beginning of the builder-buyer relationship. Refundable if project does not proceed.

In property investment, the point at which rental income equals all ownership costs (EMI, maintenance, taxes, insurance). Important for investor buyers.

Profit earned from sale of a property. Short-term capital gains (STCG) if held less than 24 months — taxed at slab rate. Long-term capital gains (LTCG) if held 24+ months — taxed at 20% with indexation benefit.

Current market value of a property. Distinguished from assessed value (for tax purposes) and book value. Used in loan-to-value calculations.

Informal group savings mechanism sometimes used in India. Not related to real estate directly, but some builders have used chit fund structures to raise money — typically high risk for buyers.

A deposit made by buyer to demonstrate serious intent to purchase, before a formal agreement is signed. If buyer defaults, may be forfeited. If seller defaults, typically returned double.

Fixed monthly payment made to a bank or financial institution to repay a loan. Consists of principal and interest components. EMI = P × r × (1+r)^n / ((1+r)^n - 1).

Additional charge levied by developer for apartments on higher floors — typically ₹50–500 per sq ft per floor depending on project. Must be disclosed upfront.

Goods and Services Tax applicable on under-construction property. Currently: 5% (without ITC) for regular housing, 1% (without ITC) for affordable housing. No GST on completed/ready-to-move property.

Taxable income category under Income Tax Act for rental income from property. Standard deduction of 30% allowed on net annual value after property tax. Interest on home loan deductible up to ₹2 lakh.

Financial state of being unable to pay debts. Under IBC (Insolvency and Bankruptcy Code), insolvent developers can be subject to resolution process. RERA provides homebuyer protections even in developer insolvency.

A financial metric used to evaluate the profitability of a real estate investment. The discount rate at which NPV of all cash flows equals zero. Higher IRR indicates better returns.

Financial obligation attached to a property — unpaid mortgage, outstanding dues, pending litigation. Must be cleared before sale. Buyers should obtain No Dues Certificate from developer.

The price at which a property would sell in an arm's-length transaction between a willing buyer and seller, both having knowledge of relevant facts. Used for stamp duty calculation.

Financial institution providing home loans alongside banks — e.g. HDFC, LIC Housing, Bajaj Housing Finance. Regulated by RBI. Many buyers use NBFCs for home loans.

Annual tax levied by municipal corporation/local authority on property owners. Varies by property size, use, location, and age. Must be up to date for property transfer.

Government-determined minimum value for property transactions in each area — used as the basis for stamp duty calculation. Also called Circle Rate (Delhi/NCR/UP), Guidance Value (Karnataka), Jantri Rate (Gujarat).

Annual rental income as a percentage of property value. Typical residential rental yield in India: 2–4%. Commercial properties: 6–9%. Useful metric for investor buyers.

State government tax on property transactions, payable at the time of executing a sale deed. Varies by state, property type, buyer gender, and location. Typically 3–8% of market/agreement value.

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 — allows banks to auction mortgaged property to recover loans without court intervention.

Tax Deducted at Source at 1% of property sale consideration (if property value exceeds ₹50 lakh) — deducted by buyer from payment to seller and deposited to government. For NRI sellers, TDS rate is 20–30%.

Small initial payment (₹11,000 to ₹1–2 lakh typically) paid to block a property before formal agreement. Typically refundable if deal does not proceed.

Document from a registered valuer certifying the market value of a property. Required for home loans and insurance. Issued by RBI-registered or government-approved valuers.