Here is How You Can Save Tax on Your Real Estate Investment

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It is an established fact that buying a home is of both monetary value and emotional value. That is precisely why to unburden homebuyers the government offers income tax benefits. These benefits exist in a wide spectrum and are grouped according to the property type, nature of construction and home loan amount. This can be understood with the simple fact that developers like Vinod Goenka advice first-time homebuyers to invest in an under-construction property. Homebuyers can claim more tax deduction when buying an under-construction property rather than a ready property.

To help you further, we have come up with a list that explains how you can be a smart planner and save tax on real estate investment:

Indexation benefits

This benefit is available for long-term capital gains on a property. When you consider the cost of inflation, this benefit allows the cost of acquisition of the property to be adjusted. The indexed cost of purchase will be calculated with the help of the Cost Inflation Index, which is notified by the income tax department every year.

Invest in specified bonds

Section 54EC provides the exemption on capital gains tax. The investment is to be made within six months of the sale of the property. It is possible for a person to invest up to Rs. 50 lakhs in these bonds, which have a tenure of three years. Whereas, the minimum investment in 54EC bonds is 1 bond amounting to Rs. 10,000, with a 5.75% rate of interest payable annually.

Section 80EE

As of effective FY 2016-17 (AY 2017-18), this section is reintroduced. Now the deduction is allowed for up to Rs. 50,000 per year until the loan is repaid. The Section does not require you to be a resident to be able to claim this benefit. This means that both Resident and Non-Resident Indians can claim this deduction. The Section does not necessarily specify if the house should be self-occupied to claim any deduction. Moreover, the deduction is possibly claimed only by individuals for the house purchases jointly or singly. If a person co-owns the house with a spouse and they both are paying the installments of the loan, then they both can claim this deduction.

Section 80C

Under this section, the amount paid as repayment by an individual of the principal amount of a home loan will be allowed for a tax deduction. The upper cap of this deduction stands at Rs 1,50,000 currently, that includes amounts invested in tax-saving fixed deposits, equity-oriented mutual funds, PPF account, National Savings Certificate, and Senior Citizens' Saving Scheme. Though, only after the construction has been completed and the completion certification received by the taxpayer, the tax benefit is allowed.

Section 24B

The tax benefits on interest paid by an individual on his home loan are what this section deals with. For a self-occupied property, Rs 2 lakh is the maximum tax benefit allowed. From construction, reconstruction, repair, renewal to purchase residential property, this home loan can be made use of. In scenarios when the property for which the home loan is taken is neither self-occupied nor rented out, then no maximum limit will be prescribed, and the whole loan interest can be claimed for deduction.

While these tips will help you save on taxes, if you are looking for lucrative properties to invest in, you might want to consider Dynamix Group. There facilities and properties are top notch and will leave you spoilt for choice.

About Shruti Sharma Content Curator 7 connections, 0 recommendations, 57 honor points.

Joined APSense since, November 29th, 2017, From Delhi, India.

connections,recommendations,honor points.Joined APSense since, November 29th, 2017, From Delhi, India.

Created on Dec 18th 2019 04:45. Viewed 144 times.

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