Income tax exemption on property - here is how to avail it

Income tax on property: Having a house that you own is desire that many people hold. Not just that investing in real estate is also one of the preferred options today. But it is not as easy as it looks. Property ownership and rental income come under the purview of income tax and the owner is liable to pay income tax on their property as per Section 24, titled “Deduction From Income from House Property”.

So how can one save tax on income from property? Here are some deductions that can be applied while filing the income tax which will reduce the tax liability

Income tax on property: What is taxable?

To understand the deductions, one needs to first know what comes under section 24 of the Income Tax Act.

-Giving one’s house on rent comes under income tax as the rent obtained is considered as income

-if an individual owns more than one house then the Net Annual Value of those houses, except the one the owner is living in, is considered as income.

Only the property that the owner lives in will not invite any tax.

Also Read: 4 tips to repay your Credit Card debt faster

Income tax on property:  Deductions to save tax

Property owners can enjoy the benefit of the following deductions which if applied accurately can help save tax:

1.Standard Deduction:

Property owners can avail 30 per cent of Net Annual Value of the house property as deduction if property is let-out that is rented for the whole or a part of the year during the previous year. This is not applicable in case the owners are residing on that property.

2.Interest on Loan:

Self occupied residential house property owners can claim Rs 2 lakhs on their home loan interest. The same applies if the house is vacant. If the owner has rented out the property, the entire interest on the home loan is allowed as a deduction. The deduction on interest is limited to Rs.30,000 if the owner fails to meet any of the below given conditions for the Rs 2 lakh rebate.-

-One must take home loan to buy and construct the property;

-The loan must be taken on or after 1 April 1999;

-The purchase or construction must be completed within 5 years from the end of the financial year in which the loan was taken

3. Section 80C

A newly bought property can get the benefit of section 80C deduction. Property owner can claim up to 10 per cent deduction on stamp duty and registration. The maximum amount that can be deducted under Section 80C is Rs 1.5 lakh. Owners can also  claim the dedications for the costs incurred during the transfer of a newly constructed house.

4. Municipal Taxes

Owner can claim deduction on the taxes levied by local authority with respect of house property under these two conditions

1.Taxes are borne by the owner; and

2. Taxes are actually paid by them during the year.

Income tax on property: Calculation

Click here to get more stock market updates I Zee Business Live