What Are the Tax Benefits of Real Estate Investments?


 A year ago in 2019, I was contemplating buying a property I was researching the different tax benefits of real estate investment. Fortunately, I managed to buy an apartment in the posh Amar Serenity in Pashan locality and have claimed few benefits such as tax deduction. Since there is a lot of confusion, I thought of blogging about the different ways of saving tax when you are thinking about buying a property. 

Knowing the direct relation of real estate investment and tax benefits depends on a lot of factors and the type of property whether it is residential or commercial property, etc.  Most of the people take out of a loan which enables them to claim tax exemption on the interest they pay on the loan amount. 

Know the different tax advantages of real estate investing 

A. Sector 24

When you invest in real estate by buying a loan, by law you are allowed to claim a certain amount that you can claim as a tax deduction from income gotten from a house or property. You can take advantage of this by either claiming deductions earned from a house or property from the Net Annual Value or a Standard deduction on the interest levied on the loan amount making it a really helpful tax benefits on real estate investment.  

B. Section 80C

The big monetary implication of buying a property by taking out a loan is the fact that one has to pay the principal amount back. Fortunately, you can claim tax exemption from this by claiming this is a deduction on property investment made from the return of income. The upper limit for amount is set for rupees 1.5 lakh in 2020 but this could change depending on tax laws in the future. 

C. Capital Gains

One of the widely admired tax advantages of real estate investing is the claim on the capital gains. In simple terms, capital is a short or long-term income that arrived from the property’s increase in value at the time of sale. Depending on the tax bracket and the amount gained from the capital, one can take the tax benefit using this rule.  

D. Depreciation 

Anyone who is planning to invest in real estate will at some point have to take advantage of the depreciation tax benefit. It is often known as the power of the benefits as the upper limit of the amount is more than any of the above-mentioned options. There are situations when over time, the value of the property starts depreciating and in-order to maintain the cash flows. 

If you are planning to invest in real estate in Pune, now is the best time to do so! Some of the best residential complexes such as Amar Serenity have cost-effective options that suit anyone’s budget. Don’t forget to claim tax exemptions should you choose to buy property soon!

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