Tax Benefits of Investing in Real Estate: Maximizing Your Returns

Investing in real estate provides several tax benefits, from deductions to deferrals. These can apply to both residential and commercial property investors, enabling them to retain more of their profits while reducing their overall tax burden. Owning a property, receiving tax benefits, earning rental income, and many other benefits come with real estate investing. Investing in real estate in Bangalore, or any other part of India, can offer a range of tax benefits that make property investment an attractive option.

Below are some of the key tax benefits associated with real estate investments in India:

1. Tax Deductions on Home Loan Interest (Section 24b)

• Self-Occupied Property: If you buy a home with a loan and live in it, you can claim a deduction of up to ?2 lakh per financial year on the interest paid on the home loan.
• Let-Out Property (Rental Property): There is no upper limit for deduction on the interest paid on the loan for a rented property, but the total loss that can be claimed under the head "Income from House Property" is capped at ?2 lakh.

2. Principal Repayment Deduction (Section 80C)

• Under Section 80C, you can claim a deduction of up to ?1.5 lakh per annum on the principal repayment of a home loan.
• This deduction is available for both self-occupied and rented properties.

3. Stamp Duty and Registration Charges (Section 80C)

• You can also claim deductions on stamp duty and registration charges under Section 80C (within the overall limit of ?1.5 lakh), but only in the year these expenses are incurred.

4. Deduction on Property Taxes

• Property tax paid by the owner can be deducted from the rental income while calculating taxable income under Income from House Property.

5. Income Tax Benefits on Rental Income

• If you rent out your property, you are allowed to deduct 30% of the Net Annual Value of the property as a standard deduction for maintenance under Section 24(a). This is called the Standard Deduction.
• Net Annual Value = Gross Rental Income - Property Tax Paid.

6. Capital Gains Tax Benefits

Sitharaman proposed lowering the LTCG tax rate on real estate from 20% to 12.5%.?However, she also suggested removing the indexation benefit for homes bought on or after April 1, 2001.? Sitharaman's proposal gives taxpayers the option to choose between the lower rate without indexation or the higher rate with indexation.?

Real estate industry relief ,This change is expected to provide much-needed relief for property owners and the real estate industry, which is a significant employment generator in the economy.?It also allows for more stability in the real estate market.?

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• Long-Term Capital Gains (LTCG): If you sell the property after holding it for 2 years (changed from 3 years after 2017)
• Short-Term Capital Gains (STCG): If you sell the property within 2 years, the gains will be considered Short-Term Capital Gains (STCG) and taxed according to your applicable income tax slab.
• Exemptions under Section 54 and 54F: Section 54: If you sell a residential property and invest the capital gains in another residential property, you can get an exemption from capital gains tax. The exemption is available for up to two properties if the capital gains are less than ?2 crore. Section 54F: If you sell any capital asset other than a residential house and invest the proceeds in buying or constructing a new residential house, you can get tax exemption under this section.

7. HRA and Home Loan Benefits

• If you have taken a home loan and are living in rented accommodation (due to work location, etc.), you can claim both House Rent Allowance (HRA) and home loan tax benefits. HRA can be claimed under Section 10(13A) for paying rent, while home loan interest and principal can be claimed under Sections 24 and 80C, respectively.

8. Deductions on Joint Home Loans

• If you take a joint home loan with a co-owner, both individuals can claim deductions on the interest (up to ?2 lakh each) and principal (up to ?1.5 lakh each) separately, doubling the tax benefit.

9. Benefits for First-Time Home Buyers (Section 80EE and 80EEA)

• Section 80EE: First-time homebuyers can claim an additional deduction of ?50,000 on home loan interest (over and above the ?2 lakh limit under Section 24b), provided the loan amount is less than ?35 lakh and the property’s value is ?50 lakh or less.
• Section 80EEA: Extended the benefits of 80EE, allowing an additional ?1.5 lakh deduction on interest for affordable housing (properties valued up to ?45 lakh). This benefit is available until March 31, 2025.

Several Benefits to buying a property in a woman's name

Lower stamp duty

In most states, women pay lower stamp duty and registration charges than men.?

·???????? Lower interest rates

Women may be eligible for lower interest rates on home loans, which can make it easier to buy a home.?

·???????? Tax benefits

Women who own property may be eligible for several tax benefits.?

·???????? Protection from legal disputes

Property registered in a woman's name can provide protection from legal disputes, such as inheritance disputes or marital discord.?

·???????? Financial independence

Buying a property can provide women with financial security and independence.?

·???????? Women empowerment

Investing in property under a woman's name can help to reduce the gender gap in property ownership.?

·???????? Easy succession

If the owner dies, it may be easier for the next of kin to claim inheritance rights if the property is registered in a woman's name.?

·???????? Access to schemes

Women may be eligible for special concessions and benefits under schemes like Pradhan Mantri Awas Yojana (PMAY).

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Real estate investment in Bangalore offers multiple tax benefits, especially through deductions on home loans, exemptions on capital gains, and benefits for rental income. If planned well, these can significantly reduce your tax liabilities and boost your returns on investment.

Contact Us and Start Investing in Property to Save on Taxes!

Our team of real estate experts can guide you through the process of finding the right investment property, maximizing your returns, and ensuring you leverage every available tax benefit.!

?? Call us: +91 9164047047 | +91 7026667699 ?? Website: www.propertymatrimony.com