Most of the people find the fulfilment of their dreams in owning a property which merely depends on their investment. The amount they are going to invest on a property is directly in proportion with the quality of living and improvement they want to show up in their standard of living . This will be the general tendency of the people to choose less investment but gain more profits from it. So, one must know about the tax deduction that is involved with a property there by gaining the fair amount of profits on it.
A great time to invest:
There is new phase of real estate which is common for the buyers in India. The middle-class investors are hardly empowered. Only few of the features such as rise of residential area, amicable locations for a family, home insurance given to ensure protection in the case of damage and splendid lifestyle can be accessed by the people here as a whole. One can attain a holiday individual house at the beach or in the hills hoping for a better deal or locality.
Tax deductions on property investments:
One can always have the question about the benefits one can especially gain when they invest money on the property. The tax deduction can always stand as the best answer for this.
Previously, the limit for the tax deduction was Rs.24, 000.But in the recent times, it is increased to Rs.60, 000 by our Finance Minister, Arun Jaitely. Besides that, he also declared relief for the first time home buyers who takes loan on a house that doesn’t exceed Rs.50 lakh by reducing the tax amount on a loan of Rs.35 lakh by Rs.50,000 per annum in 2016-17 additionally.
A vague thought, of investing money on the tax, itself acts as saving the income which is going to spend as tax. Your wealth is accounted legitimately only when you invest in property. Since you’re not taxed by the government for this, it can be counted as ones profitable amount.
Types of ownership and benefits:
One who invests on property gains anyone of the ownership.
- A person who owns a property for his personal purpose.
- Person/landlord who makes profit my renting their flats.
- The combination of the above ownerships can also be considered as another type of ownership.
When a person applies for a loan on his house, he gets deductions on the taxes he has to pay and also during the process of it. Their taxable income is excluded and thus freed from a lot of taxes because of the mortgage payment and the investment itself.
There are many ways for an owner to reduce the taxes that he has to pay. Let us the take the example of you renting your investment to someone,then you get the reduction in your taxes on lease because of your activities as land lord also in managing the property by maintaining an office. You not only receive savings from the deductions of tax but also gain considerable amount through the rent on the property.
Tax Benefits on Home Loan:
When a person buys a 3bhk apartment on loan, he may receive various tax benefits through which the buyer can be ensured not only in paying lesser taxes but also in managing outflow of his cash. If at all a person buys a house on loan selecting the payment through EMI, he can claim the interest component in the EMI as a deduction.
In addition to this, suppose if the house on which you took loan is constructed before the end of the year, you can claim the deduction in the interest for the entire financial year. So, one can claim a maximum amount of 2 lakhs on our own house of residence every year.If your house is rented, the entire interest for the year can be claimed as deduction which means that the owner, as well as the landlord, can reap the benefits of this.
Section 80C of the Income Tax Act provides the eligibility of claiming your EMI component which goes towards principal.For a year, one can claim the amount by adding all the outgoings towards principal.Under this section 80C, one can claim a maximum deduction of Rs. 1.5 lakh.
Investor can not only gain the deductions on principal repayment, but also claim the payment that he has made towards the registration and stamp duty purpose.
Property acts as an element of confidence for an individual when they think of their future.They seem to stand the same at any time along with the exemption from the tax payment. In the present year, all the parts felt the need in fulfilling the dreams of common people and also to encourage them in dreaming higher and brighter.The Government along with the market took reasonable sides for this.