Govt. tightens screws on real estate transactions

KATHMANDU, JUNE 4: The government has introduced stricter regulations on the purchase and sale of real estate, requiring greater transparency and formal financial documentation. The Department of Land Management and Archives has made it mandatory for both buyers and sellers to submit bank statements along with a completed Know Your Customer (KYC) form before any property transaction can be approved.

Under the new directive, aimed at curbing money laundering and the financing of terrorism, all real estate transactions above Rs 1 million must follow formal banking channels. Specifically, registration fees and other charges must be paid directly from the buyer’s bank account, while any applicable capital gains tax must be deposited into the designated government revenue account from the seller’s bank account.

In addition, sale agreements certified by local authorities will no longer be considered sufficient documentation for transactions over Rs 1 million. In such cases, buyers must also provide proof that payments to sellers were made through banking or digital payment systems.

The new rules further require that if a buyer or seller conducts real estate transactions worth Rs 30 million or more, either in a single transaction or cumulatively within a single day, the details must be reported to the Financial Information Unit (FIU) of Nepal Rastra Bank. If any transaction appears suspicious, both the transaction office and the reporting institution are obligated to notify the FIU.

The directive clearly states that these provisions apply to both natural persons (individuals) and legal entities (such as companies).

For transactions between Rs 1 million and Rs 5 million, payment must be made through formal banking or electronic systems. Transactions exceeding Rs 5 million must be settled either through digital transfer or with a "Good for Payment" cheque issued in the name of the seller.