Selling land or a house: a practical guide

General information, not legal or tax advice. Tax rates, fees and procedures change and some differ by province or municipality. Confirm with the land office, the tax office or a lawyer before you agree a deal.

Selling land or a house goes faster, and with fewer nasty surprises, if your papers are in order before you advertise. This guide covers preparing documents, setting a price, the taxes you pay as a seller, handling the advance safely and avoiding fraud.

1. Get your documents in order

Buyers, their banks and the land office will ask for these. Gather them first:

• Original land ownership certificate (Lalpurja). The newer system-issued Lalpurja carries a Land Owner Identification Number; an older certificate may need updating before some online or remote services can be used.
• Citizenship certificate of every owner named on the Lalpurja.
• Land revenue (malpot) receipt for the current fiscal year.
• Property tax clearance from your municipality.
• Trace map and blueprint from the Survey Office.
• For a house: the approved building drawings (naksha pass), the completion certificate, and the house recorded on the Lalpurja. Banks financing your buyer will usually insist on these.
• The local government's letter on the value of the house and its recommendation confirming house and road access, which the land office asks for at registration.
• If you inherited the property, make sure the name transfer (namsari) into your name is complete.
• If several people own it, all must sign, or give a properly certified power of attorney.

2. Clear any loan or freeze first

If the land is mortgaged to a bank or cooperative, the land office records a freeze (rokka), and it cannot be sold until the freeze is lifted. Under the Land Administration Directive 2081, a freeze is released only on a letter from the same body that placed it, or a final court order; banks now release mortgages online. Repay the loan (or agree with the buyer's bank to repay it at the time of sale) and get the release done before registration day.

3. Check the records match the ground

Walk the boundaries with the trace map. Are the area, shape and road access the same on paper and on the ground? Has anyone encroached? Fix differences, including outdated old/new (haal-sabik) records, with the land and survey offices before a buyer finds them.

If you are selling part of a plot, it must be divided (kitta-kat) through the Survey Office, and the Land Use Regulation 2079 sets limits. For land classified as residential or commercial, a new plot may not be smaller than 130 square metres (with some exceptions down to 80), and a plot under 500 square metres may not be more than four times as long as it is wide. Agricultural land has larger minimums (for example 500 square metres in Kathmandu Valley). Ask the Survey Office what applies to your land.

4. Set a realistic price

• Compare similar listings and, if you can find out, recent sale prices nearby: same road width, size, shape and distance to the main road.
• Consider an independent valuation by a professional valuer, such as one approved by banks.
• Know the government minimum valuation for your area. The land office charges the registration fee on the deed price or this valuation, whichever is higher.
• A clean title, completion certificate and good road access support a higher price. Problems you disclose up front are better than ones the buyer discovers later.

5. Taxes you pay as a seller

Capital gains tax is due on your gain (sale price minus what the property cost you) and is collected by the land office before the deed is passed. For individuals, the Inland Revenue Department's FY 2083/84 rates are:

• 7.5% if you have owned the property for five years or more
• 10% if you have owned it for less than five years

These were raised from 5% and 7.5% by the Finance Act 2083. Some disposals are excluded under the Income Tax Act, including a private house owned for ten years or more in which you have lived for a total of ten years, disposals for less than Rs 10 lakh, and transfers within three generations by means other than sale. Keep proof of what you paid for the land and for building the house, because they reduce the taxable gain.

Don't under-declare the price in the deed to reduce tax. It is illegal, the land office checks the price against the minimum valuation, and it removes the buyer's protection, which makes careful buyers walk away.

6. The advance (bainaa) agreement

When you agree a deal, the buyer often pays an advance. Protect both sides:

• Put it in a written agreement signed by both parties and witnesses: names, plot number and area, total price, advance amount, registration date, who pays which fees and taxes, and what happens if either side backs out.
• Take the advance through a bank, not in cash.
• Keep the period to registration short, so circumstances do not change.

7. Registration day

Both parties (or authorised attorneys), with witnesses, go to the land office. The officer asks whether the money has been paid. Take payment through the banking system: some provinces require it. Bagmati Province's Finance Act 2083, for example, requires banking-channel payment for deals from Rs 5 lakh to Rs 50 lakh, and a good-for-payment cheque, bank guarantee, e-payment or deposit into your account above Rs 50 lakh. Hand over the original Lalpurja only at the office, as part of registration. See How property transfer works for the full procedure.

8. Avoiding fraud as a seller

• Don't give your original Lalpurja, signed blank papers or a power of attorney to a broker or buyer before registration.
• Verify payment has actually reached your account before the deed is passed. Be wary of cheques that may bounce or "payment screenshots".
• Be careful with brokers: agree any commission in writing, payable only after registration.
• Watch for buyers who want the price written lower than actually paid, or who push you to skip the bank.

9. After the sale

• Hand over keys and any building documents the buyer needs.
• Take final meter readings and settle electricity, water and property tax up to the handover date. NEA's meter transfer page shows the buyer will need dues cleared to transfer the meter.
• Keep copies of the deed, tax receipts and payment records.

Checklist

• Lalpurja, citizenship, malpot receipt, tax clearance, trace map, permits and completion certificate ready
• Loans repaid and freeze released
• Boundaries, area and road access match the records
• Price checked against comparables and the minimum valuation
• Capital gains tax worked out at current rates; proof of costs kept
• Written advance agreement; payments through the bank
• Lalpurja handed over only at registration