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Follow on Google News | Find Out the Tax Benefits of Real Estate InvestmentsDealing with various levy duties related to your real estate transaction can become a predicament.
By: Ritu Housing Now coming back to the tax benefits in real estate investments, you need to first know the taxes that are associated with real estate. When it comes to purchasing, owning/holding and selling of a property in India, only 4 kinds of taxes are involved, which are listed below: · CAPITAL GAINS TAX – Applicable once on sale of property. · PROPERTY TAX – Applicable every year while holding/owning a property. · WEALTH TAX - Applicable every year while holding/owning a property. · GST (Goods and Service Tax) – Applicable on properties under construction only. There is no tax applicable on purchasing a property, although you have to pay Registration and Stamp Duty which does not fall under taxation. The Capital Gains Tax is a big-time saviour when it comes to tax benefits (http://www.rituhousing.com/ There are also certain criteria that allow you to claim exemption from long term capital gains, which are listed below: · By purchasing a residential property within the specified period from the sale date as mentioned under Sec 54F of the Income Tax Act. · By constructing a residential house within the specified period or within 3 years from the date of sale. · By not selling the new property for both the above points from the purchase date. · By depositing the funds before the due date of income returns into Capital Gains Accounts Scheme 1988. · By reinvesting the long term capital gains within 6 months of sale into the mentioned government's assets. Property Tax is paid every year on the market value of the property and it generally varies between 0.5 to 2 percent. Wealth Tax is an additional tax payable only on non-productive assets over and above the minimum limit of INR 1 crore. The amount for wealth tax is applicable after deducting all the assets and liabilities. Hence, it is one such tax that is hardly applicable in spite of having properties worth in crores. GST is a recently introduced tax and it freed the real estate investors from the previous taxes such as VAT and Service Tax. The GST for real estate was 12% which has now come down to just 1% for affordable housing and 5% for the rest. This is done in the light to encourage more and more investors of all income groups as real estate is a major contributor towards the GDP. These were the list of direct and indirect taxes associated with property investments. So, if you are considering into becoming a property investor or buying a new home, you should consider all the above mentioned points in order to save yourself a good fortune. End
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