Property Insight

Know About the Tax Benefits of Real Estate Investment

Real estate investment offers numerous advantages. The attractive tax benefits of real estate investment are among the major reasons why people choose real estate over any other market. It is a great way to diversify your income sources and to increase the ROI over time.

Various real estate investors opt to invest in real estate with a limited liability company (LLC) or limited partnership (LP). This step gives way to several additional tax deductions in the business, such as advertising or marketing expenses, Legal and professional fees, Business equipment, Office spaces, travel expenses, etc.

Furthermore, real estate investment is also considered a means of passive income through rental properties, and you can even get some significant benefits from your rental asset.

Despite all the tax benefits of real estate investment, many people are unaware of the perks.

Below we will highlight the tax benefits you can get by owning a joint or individual property.

Let’s begin with talking about,

Income Tax Benefits for Real Estate Investors

major tax benefits of investment

As the Coronavirus has shaken the markets, real estate is the only commodity that still proves beneficial. Moreover, the housing loan interest rates have seen a record low in the last few years and this is the best time to invest in a property.

Also, with the government offering a 2.67 lakh subsidy on home loans, there are many other tax benefits of real estate investment.

1. Joint Property Benefits to Each Owner

The government has provided various tax benefits to individuals under ‘housing for all initiative.’ The Income Tax Act, 1961, states that it is possible to claim a deduction for the interest paid on the housing loan under the head ‘Income from house property’. 

Thus, if the house property is self-occupied, an individual can claim a deduction of interest paid on a housing loan, up to 2 lakh per financial year. 

However, if the property is held jointly, both the individuals can receive additional tax benefits from the same cost. In other words, both the house property owners will be able to claim a deduction for interest up to Rs 2 lakh each per FY (Financial year).

2. Deduction Under House Property

Section 24 is also known as the ‘deductions under house property.’ This section of the income tax allows owners to claim deductions up to 2 lakh on their home loan interest, provided they are filing returns for the last financial year on their home loan and/or if the owner or his family reside in the house property.

There can be only two types of deductions allowed; first, the Net annual value is the standard deduction, and the interest is borrowed on capital.

It should be noted that if the house is on rent, the entire interest is waived off as a deduction. 

Thus, if you are looking forward to profits from rental properties, then Mahima Group is here to help! With the selected rental services, you can invest in real estate and earn a good ROI with rental property.

3. Reduction of Tax Burden

The section 80C of income tax focuses on reducing the tax burdens of the individuals. Under this section, you can claim the tax benefits of real estate on the repayment of the principal amount.

Section 80C allows individuals and HUFs to claim a tax deduction of up to Rs. 1.5lac from their total gross Income for certain investments and payments.

4. Tax Benefits on Properties

Previously, the VAT and service charges were charged individually, but now they are merged in the GST. Talking about the GST on properties, the government levies GST on the under-construction projects according to their prices.

If the under-construction residential property is under 45 lakh, then the GST is 1%. If the property is above 45 lakh, then the GST is 5%.

In the End, We Can Conclude by Saying

Now that you are aware of the tax advantages of the property investments and attractive offers, why give it a second thought!

Mahima Group has some of Jaipur’s best residential projects for investment so that you can reap significant tax benefits.

Furthermore, if you planning to real estate investment or are a tenant and want to own a home but are saddened by hefty EMI’s then Mahima Group has taken the ‘Kiraaye se Azaadi’ initiative.

Get in touch with Mahima Group and find your perfect property.

Tanvi Punjabi

Tanvi Punjabi is a prolific content writer and has been creating user engaging content for the last 3 years. She currently works with Mahima Real estate as a writer & blogger and writes unbiased opinions about the real estate. She generally pens down her thoughts about home improvement, property buying, real estate market and tips & tricks. When she is not glued to the laptop, she is found reading books that include fiction & self-improvement.

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