Selling A Property? Here Are Five Costs That Can Eat Into Your Returns

A property owner may sell a house for Rs 1 crore and expect to walk away with a handsome profit. But the amount that eventually reaches their bank account could be much lower.

Brokerage, capital gains tax, outstanding home loans, maintenance bills and other expenses can take a sizeable bite out of the proceeds. Some costs are easy to spot. Others build up quietly while the property remains on the market.

"Many property owners calculate their returns using two numbers, what they paid for the property and what they expect to sell it for," said Gaurav Mavi, Co-Founder of BOP.in. "The calculation often looks attractive until they sit down and work out what they will retain after the sale," he told NDTV.

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For a property worth Rs 1 crore, even a 1 per cent brokerage fee amounts to Rs 1 lakh. Add taxes, loan dues and other expenses, and the gap between the expected profit and the money in hand can become significant. According to Mavi, here are five costs property sellers should account for before accepting an offer:-

1. Brokerage: The First Cut From Your Sale Proceeds

Finding a buyer is not always free. If a property owner hires a broker, the commission can take a significant bite out of the final amount. The fee depends on the agreement, the location and the type of property. Even a seemingly small commission can add up when the property is expensive.

For instance, a 1 per cent brokerage on a property sold for Rs 1 crore comes to Rs 1 lakh. At 2 per cent, the bill doubles to Rs 2 lakh. Sellers should clarify the brokerage rate, when it becomes payable and whether any additional charges apply before signing an agreement with an agent. The key is to calculate the fee using the expected selling price, not the profit. Brokerage is generally linked to the transaction value, even if the seller's actual gain is modest.

2. Capital Gains Tax: The Profit May Not Be Entirely Yours

Selling a property for more than its purchase price does not mean the entire difference belongs to the seller. Capital gains tax may apply. The tax calculation depends on factors such as the purchase date, sale date, acquisition cost, eligible improvement expenses and applicable exemptions.

Under the current rules, gains from property held for more than 24 months are generally treated as long-term capital gains. These are usually taxed at 12.5 per cent without indexation. However, resident individuals and Hindu Undivided Families selling land or buildings acquired before July 23, 2024, may be able to use the earlier 20 per cent rate with indexation if it results in a lower tax bill. Short-term gains are generally taxed at the applicable income-tax slab rates.

There is another deduction sellers need to plan for: tax deducted at source (TDS). For a resident seller, a property transaction involving a sale consideration or stamp duty value of Rs 50 lakh or more generally attracts 1 per cent TDS under Section 194-IA. The buyer deducts the tax at the time of payment or credit, whichever is earlier. The applicable calculation uses the higher of the sale consideration and stamp duty value.

On a Rs 1 crore transaction, that could mean Rs 1 lakh being deducted upfront. This is a tax credit against the seller's tax liability, not necessarily the final tax payable. Gaurav Mavi, Co-Founder of BOP.in, advises sellers to consider taxation well before finalising a deal. He points out that the property's acquisition date, holding period and applicable exemptions can affect the final amount retained. Sellers should estimate their capital gains tax separately from TDS. They should also check whether they qualify for any exemption before deciding how much of the sale proceeds will be available for their next financial goal.

3. Outstanding Home Loan: The Sale Price Is Not Your Take-Home Amount

A property may be worth Rs 1 crore today, but the seller may still owe a substantial amount to the bank. If the home was purchased with a loan, the outstanding principal must be settled as part of the sale. The amount remaining after repayment is what matters for the seller's immediate cash flow.

Consider a homeowner selling a property for Rs 1 crore with Rs 30 lakh still outstanding on the home loan. Before accounting for other costs, the amount left is Rs 70 lakh. The seller should obtain a current foreclosure or loan-closure statement from the lender. They should also check the documentation needed to close the loan and release the original title documents.

If the sale proceeds are needed to fund another purchase, delays in settling the existing loan could disrupt the next transaction. Mavi advises property owners to account for outstanding loan dues alongside brokerage, taxes and other expenses when estimating how much money they will actually receive.

4. Maintenance, Repairs And Society Dues: The Costs That Keep Adding Up

A property does not stop costing money just because its owner has decided to sell it. Society maintenance charges, property tax, repairs and other recurring expenses can continue until the deal is closed. If the home has been vacant for months, the owner may also need to spend money on cleaning, repainting or fixing damaged fittings before buyers agree to a price.

These expenses can become particularly frustrating when a property takes longer than expected to sell. Suppose an owner spends Rs 60,000 on overdue maintenance and repairs before handing over the property. That is another Rs 60,000 to deduct when calculating the net proceeds.

But spending more does not always mean getting a better offer. Mavi recommends assessing which repairs are likely to improve the property's appeal and which are unlikely to translate into a higher selling price. Sellers should also clear outstanding society dues and property tax to avoid last-minute disputes or delays. The objective is not to make the property look perfect at any cost. It is to spend only where the likely benefit justifies the expense.

5. Legal Expenses And The Cost Of Waiting For A Better Offer

The final cost is not always a single bill. It can be a combination of paperwork expenses and the money lost while waiting for the right buyer. Depending on the transaction, sellers may need to pay for legal advice, documentation, obtaining records or clearing issues related to the property's title. They should confirm which expenses apply to their particular sale instead of assuming that every transaction involves the same charges.

Then comes the less obvious expense: time. A seller who rejects a reasonable offer in the hope of getting a higher price six months later continues to bear maintenance, taxes and other holding costs. The money also remains locked in the property instead of being available for another investment or financial need. For example, a seller who spends Rs 10,000 a month on property-related holding costs incurs another Rs 60,000 over six months. If the property still does not sell at the hoped-for price, those expenses can eat into the eventual return.

As Mavi points out, the cost of waiting should not be ignored. A higher offer is not automatically a better deal if it comes with uncertain terms or a much longer wait for payment.

How Much Will You Actually Keep After Selling Your Property?

Before listing a property, sellers should prepare a simple estimate of their net proceeds.

The illustration shows why the headline selling price can be misleading. A Rs 1 crore sale does not necessarily mean the seller will have Rs 1 crore available to spend. Mavi's advice is to start with a realistic sale price, subtract the outstanding loan, brokerage, taxes and transaction expenses, and then account for repairs and holding costs. Sellers should also keep a margin for unexpected bills.