The 4 major tax benefits of real estate investments
Investing in residential properties brings a lot of tax benefits to investors. If you are not aware of the tax benefits that await you, this blog is just what you need to read. So without further ado, let us break down and understand the tax benefits of investing in properties.
Section 80C
Under this section, the amount you pay for repaying your home loan’s principal amount is allowed to be claimed for a tax deduction. You could claim deductions for the investments you have made for earning an income. Currently, the maximum deduction you could avail of is Rs.1,50,000. The tax benefit would be granted only post the completion of the construction of the property in Navi Mumbai or anywhere else and after receipt of the completion certificate. This section also allows deduction of the interest paid on account of the home loan if the loan is taken for renovating or extending a house. Again, the benefit would be granted after the construction is completed.
Section 24B
Under this section, taxpayers could claim deductions for the interest paid on home loans. For a self-occupied property, the maximum tax benefit allowed is Rs. 2,00,000. The loan could be for purchase, construction, repair, renewal, or even reconstruction of all types of residential properties such as flats in Navi Mumbai, Mumbai, Delhi, or anywhere in the country. For a property that isn't self-occupied, there has been no prescription of a maximum limit and you could claim the entire loan interest amount for a deduction.
Section 80 EE
From the year 2016-17, first time home buyers could avail of a rebate of Rs.50,000 on home loan interest payments over and above the limits prescribed under sections 80C and 24B. So if you are thinking about buying your dream 1 BHK in Navi Mumbai, now is the best time! The deduction, however, could only be claimed if the property value does not exceed Rs. 50 lakhs and the home loan sought is of an amount less than Rs. 35 lakhs. You can enjoy the benefit until the loan is completely repaid.
(Sections 54 & 54F)
These sections grant you exemption from paying capital gains tax under specific conditions. If you have earned a long term capital gain by selling a property, you can claim exemption from paying capital gains tax by investing the amount of capital gain in up to 2 properties. You could also invest the gains for constructing a property but it must be completed within 3 years from the sale date. For example, if you have earned a capital gain of Rs. 20 lakhs by selling a house, you will need to pay 20% of it (i.e. Rs. 4 lakhs). But if you invest the capital gain for buying flats in Kharghar, Taloja, Gurgaon, Chennai, or any other part of India, then you won't be liable to pay the tax. The reinvestment must be made 1 year before the sale of the property or 2 years after it.
Section 54F gives you exemption from capital gains tax if you have earned the gain from any asset other than property and you reinvest all the sales proceeds (and not just the amount of capital gain) into a property.
These 4 sections make it extremely lucrative to invest in residential properties at the moment. If you are excited by this idea, then consider Siddhivinayak Homes' Riddhima as a project for investment. This property is developed by one of the best builders in Navi Mumbai and boasts of a plethora of facilities and benefits. Do check it out!
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