What are the Tax Benefits of Investing in Real Estate in India?

A smart investment is all about long-term planning and safety. It should be an investment that adds value and is bankable by nature. This will give you security and also ensure that your progeny have a good chance of becoming financially independent.

Investments come in many shapes and sizes. Some are recent, like investments in cryptocurrency, gold bonds etc. Others are age-old like investing in stocks and shares, gold etc. Among the oldest and most trusted investment of Indians in real estate.

So what are the advantages and tax benefits of investing in real estate in India? They are listed below

1. Section 80 C

Under this section, one can claim benefits on the repayment of the principal amount of the loan. While there is no minimum limit, the maximum limit is INR 1.5 lakhs.

2. Depreciation

If you are a big-time player with plenty of real estate investments and a healthy portfolio, then depreciation of real estate assets can be used for claiming benefits in tax. By showing depreciation in real estate, one can improve cash flow and reduce any tax liabilities that may arise. Wisdom Properties offers a huge array of real estate options for customers of any size or portfolio needs, including residential, commercial, farmlands etc. Thus, whatever be the large or small requirement, we can satisfy it.

3. Section 24

Any home loan or property loan will involve paying interest to a financial institution. Section 24 allows individuals to claim exemptions on the interest that is paid for the said loan. For any income that an individual earns through the house, deductions are allowed per the section. However, there only two type of deductions are allowed. Consult with your financial advisor or chartered accountant for additional details.

4. Capital gains

Capital gains means the gain that is achieved by the sale of a capital asset. The profit that is gained by the said sale is part of the income of the individual and hence, there is a tax that needs to be paid. This tax is called capital gains tax. The objects coming under capital assets are jewellery, land, patents, trade marks, houses and property, leasehold rights etc.

There is a short term gains tax and a long term gains tax. In case an asset is held for more than 36 months, it is termed a long-term asset. Anything below this is termed a short-term asset.

In India, there is no tax on property that is inherited naturally as a matter of right. It depends on the tax bracket how the tax is to be calculated and there are many specifics and by-laws.

At a very high level, for long term capital gains, calculation will involve calculations of expenses that incur due to the transfer, money paid for acquisition and money paid for improvement. Exceptions are provided under section 54, section 54 EC, section 54 B and section 54 F.

Similarly, short term capital gain will involve deductions for cost of improvement of property, cost associated with property transfer and costs for acquiring the property. It is important to note that inflation also plays a role and there are indexation benefits etc to be applied in order to arrive at a fair calculation.

Considering the complexity and other associated factors, the best will be to consult your financial advisor or your certified chartered accountant for how to handle and go about these things.

About Wisdom Properties

Wisdom properties is a leading property developer in Chennai offering plots for sale in Guduvanchery, plots for sale in Oragadam, investment/residential plots for sale in Oragadam, DTCP approved plots for sale in Chennai and property for sale in Maraimalai nagar. As a leading real estate company in Chennai, they bring a repuatation for excellence in every touchpoint and all their plots and villas have sound title deeds and are free of encumbrances.

Additionally, because they have an excellent reputation, getting a loan is also very easy and they have tie-ups with leading financial institutions for facilitating the process.

Interested in purchasing a plot or villa, contact Wisdom Properties at +91 93606 93606 or or just drop into their office at No.1, 5th Cross Street, New colony, Chrompet, Chennai - 600 044, Tamilnadu, India.