Hidden Costs of Buying Property: What to Budget Beyond the Price

The largest cost beyond the price is usually the stamp duty and registration charges you pay to the state government when the sale deed is registered. Registration in Karnataka runs through the Kaveri online system, where the charges are worked out and paid online, before the final step at the sub-registrar office.

Two things catch buyers out. First, stamp duty is charged on the higher of the government's guidance value and the price you have agreed. If the guidance value for the property is higher than your price, you pay duty on the guidance value; our guide to guidance value and market value explains why the two differ. Second, the rates and any additional cess or surcharge are set by the state and can be revised, so a figure from a friend's purchase a few years ago may not apply to yours.

To budget accurately, check the guidance value and the current charges for your specific property — the steps are in our guide to stamp duty and registration in Karnataka — and add a margin for the incidental costs of the day, such as document preparation, scanning, certified copies and travel. Your sale agreement may also need to be stamped, so ask your lawyer about that too.

Before you pay a meaningful advance, a property lawyer should check the title and approvals. Their fee is one of the most worthwhile costs in the whole purchase, but it is still a cost to plan for, along with:

• Encumbrance Certificates for the period your lawyer asks for, applied for online through Kaveri or at the sub-registrar office;
• certified copies of earlier deeds and records, which may each carry a fee;
• land-record extracts such as the RTC (Pahani) from the Bhoomi portal, where the land was once agricultural;
• a survey or boundary check, especially for plots, to confirm the site on the ground matches the documents;
• drafting fees for the sale agreement and the sale deed.

Ask the lawyer for a written scope and fee upfront, including whether they will attend registration. Our property documents checklist shows what they will be reviewing.

Resist the temptation to save money here. A problem found before registration can usually be fixed, negotiated or walked away from; the same problem found after you have paid and registered is far more expensive and stressful to untangle.

If you are buying with a home loan, the lender's charges add up before you pay a single EMI. Ask for a written list of:

• the processing fee, and whether GST (goods and services tax) is added to it;
• legal and technical fees for the lender's own title check and valuation, where charged separately;
• charges for creating the lender's mortgage over the property, which may include stamp duty on the mortgage document, depending on how it is created;
• insurance — many lenders require the building to be insured, and some suggest a loan-protection policy that pays off the loan if a borrower dies. Ask whether it is required or optional, and compare it with a term insurance policy before accepting;
• pre-EMI interest for an under-construction property or staged construction, paid on the amount released until full EMIs begin.

Remember too that the loan covers only part of the property's value, based on the lender's own valuation. The down payment, and usually the other costs in this guide, come from your own savings; our guide to home loan eligibility explains the limits.

Compare these charges across lenders along with the interest rate. A lower rate with high fees isn't always the cheaper loan.

Brokerage. If a broker or agent helped you find the property, their commission is due as agreed, often around registration. Agree the amount and exactly what service it covers in writing at the start, and ask whether GST will be added to the fee.

Khata transfer. After registration, the khata — the municipal record of the property used for property tax — must be transferred into your name by Mysuru City Corporation or the relevant local body. There are fees for this, and sometimes costs for certified copies and paperwork. Our guide to khata transfer in Mysuru walks through the process.

Property tax. Check that the seller has paid property tax up to date, with receipts, before registration, because arrears can follow the property. After the purchase, property tax becomes a yearly cost of ownership for you. The amount depends on the property and the local body's assessment; the seller's recent receipts give you a sense of scale, and the corporation can confirm it.

Other dues. For a resale house, ask for the latest water and electricity bills and confirm there is nothing pending. Unpaid dues are far easier to settle with the seller before registration than to recover afterwards.

For a new house, or a plot you are building on, getting services connected carries its own costs:

• Electricity — a new connection, or transferring the existing one into your name, can involve fees and a security deposit set by the electricity supply company.
• Water and drainage — connection or transfer charges from the city corporation or the relevant local body, plus any deposit.
• Gas and internet — smaller, but still deposits and installation charges.

In gated layouts, villa communities and apartment buildings, there may also be:

• a maintenance deposit or advance maintenance for a period, collected at handover;
• a corpus fund — a one-time contribution towards a reserve for future major repairs;
• membership or transfer fees for an owners' association or club;
• charges for items such as car parking, power backup or electrical infrastructure, which some developers list separately from the price.

Ask the seller or developer for a written list of every charge payable at or after handover, and check which ones are refundable. For a resale property, ask the association whether any dues or transfer fees apply to a new owner, and get that confirmed in writing before registration.

The costs that surprise people most are often the ones they choose themselves.

• Interiors and fittings. A new house often comes without wardrobes, a modular kitchen, lights, fans, curtains or water heaters, and even a resale home usually needs painting and repairs. Get quotes early, and decide what must be done before you move in and what can wait.
• Moving. Packers and movers, some overlap between your old and new homes, and possibly rent for a notice period on your current place.
• Home insurance. Separate from anything the lender requires, a home insurance policy can cover the structure and your belongings. It is a yearly cost worth budgeting for.
• Building on a plot. If you are buying a site to build on, the purchase is only the start: building plan approval, soil testing, a compound wall, the construction itself and the connections above all follow. Our guide to house construction costs in Mysuru covers that budget.

Keep these in a separate budget line from the purchase itself. They are easy to underestimate, and cutting them at the last minute can mean moving into a half-finished home or dipping into money set aside for emergencies.

GST applies to property bought while it is still under construction, such as a house or apartment booked from a developer before completion. It does not apply to a completed property or a resale purchase. If you are buying under construction, check whether the quoted price includes GST and confirm the applicable amount with the developer and your CA.

TDS (tax deducted at source) isn't an extra cost, but it is a responsibility that falls on you as the buyer. When you buy property worth ₹50 lakh or more from a resident seller, you deduct 1% of the price as TDS under Section 194-IA, pay it to the government and give the seller the certificate; the seller receives the rest of the price. If the seller is an NRI, TDS is deducted under Section 195 at the applicable capital-gains rate plus surcharge and cess, which works out much higher than the resident rate, so involve a CA; the seller can apply for a lower-deduction certificate. Mistakes can lead to interest and penalties, so settle the TDS arrangement with the seller before registration day.

Putting it together. Before paying any advance, list every cost in this guide against the specific property, get a current figure or written quote for each, and keep a contingency for the unexpected. If you are comparing homes, Siddaganga Real Estate can talk you through the paperwork and the likely costs for the properties you are considering in Mysuru.