Property buying is a crucial decision, especially for those investing for the first time. On one hand, it is an emotional decision as it involves the life savings and on the other hand, one has to be cautious and aware of the tax implications that come along with it. However, most of us are ignorant and don’t know how to save taxes while making a property transaction.
Vaibhav Sankla, director, H&R Block India Private Limited,
advises our readers on ‘how to save taxes through property investments.Sankla says that
when you take a home loan on a ‘self-occupied’ property, you are liable to claim tax rebate on the interest of up to Rs 2 lakh, under the head ‘Income from House Property’.However, in case you own more than one property, income (equivalent to the rent that a similar property would fetch) will have to be offered to tax. One needs to pay wealth tax at the rate of 1 per cent on the second or more property investments.
Experts advise you to rent out your house because a locked house still attracts tax, which is calculated the expected market rent.If the apartment is sold within three years you will incur a Short-Term Capital Gain (STCG), which is subject to Income Tax based on your applicable slab rate. STCG is applicable when a property is held for less than three years before it is sold off. On the other hand, one can claim Long-Term Capital Gains or LTCG when you hold the property for more than three years before it is sold off.
What is done in the case of booking a property in an under construction project?
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