Tax Benefits on Investment Properties
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16 April 2019 - 8:00, by , in NRI, No comments

Indian Real Estate is witnessing a new era of development. The rise of townships, family-friendly neighbourhoods, home insurance options and luxurious lifestyle along with government initiatives of affordable housing, credit linked subsidy scheme, Goods and Services Tax and RERA have empowered the middle-class Indian investor. There could be no better time to invest in the property be it a holiday home or moving to a better locality.

Realty investments provide an opportunity for significant tax deductions. Finance minister, Arun Jaitley increased the tax deduction limit from INR 24000 to INR 60000 per annum on housing rent further fortifying the benefit of tax deductions on investment properties. He also announced an additional tax relief of INR 50000 per annum on a loan of INR 35 lakhs for the first time home buyers provided the cost of the house does not exceed INR 50 lakhs.

Indian real estate market primarily has three kinds of investors: residential property owner for personal use, residential property owner for lease, and commercial properties. Owners are eligible for tax deductions on their home loans. Their taxable income is exempted from taxes on account of the mortgage payment and investment itself under sections 80C to 80U of the Income Tax Act. The owners who rent out their residential property are entitled to tax deductions on rentals. An investment rented out receives a tax deduction for running an office to manage the property, depreciation costs etc. In addition to tax benefits, the property also yields an income stream through rent.

When a home loan is acquired, one becomes eligible for various tax benefits. This also helps in better management of cash outflow. EMIs for a home loan make the interest component claimable as the deduction. Interest up to a maximum of INR 2 lakh can be claimed for deduction from the year of completion of construction till such time as it is used for own residential purpose. In case of a rented house, the entire interest amount can be claimed as a deduction. Thus, the owner and landlord both reap benefits of tax deductions offered by the government. Also, an inference can be petitioned for the principal amount for a maximum of INR 1.5 lakhs under section 80C of the Income Tax Act. The deduction is also allowed for the claim on principal repayment and payment made towards stamp duty and registration.

Property investment provides a great way to reach the future that one envisions for them. The government has taken various steps to make this a reality. The government support along with a conducive market will help realise dreams of investors and create a possibility of dreaming even more prominent.


See Also: GST Impact: Will ready-to-move Apartments Cost More or Less?

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