As a property owner, it is essential to have a clear understanding of real estate taxation. Whether you are buying or selling a property, being aware of the taxation implications is imperative. In this blog, we will explore the fundamental concepts of real estate taxation and how it can affect buyers, sellers, and investors in Bangalore.
By gaining a better understanding of real estate taxation, you can make informed decisions when purchasing apartments in Electronic City.
Tax Benefits of Buying Apartments in Electronic City
The new tax structure is different from the older one in two significant ways. Firstly, the new structure features more slabs with reduced tax rates, and secondly, it eliminates several major exemptions that were accessible to taxpayers in the old tax regime.
Approximately 70 exemptions available in the previous tax regime are no longer applicable in the new system. Taxpayers now have the option to select between the two regimes.
Tax Benefits on Real Estate Ownership According to the Old Regime
Here is a list of the most important tax benefits on real estate according to the old regime:
- Tax Benefit on Capital Gains
When you sell your property, you may be subject to capital gains tax. However, the Income Tax Act provides an indexation benefit to adjust the cost of acquisition for inflation, effectively reducing the taxable capital gain. This benefit can be particularly advantageous for long-term property owners.
- Tax Deduction on Property Tax
Property tax payments are eligible for a tax deduction under Section 80C of the Income Tax Act. This deduction can be claimed alongside other permissible investments, with a maximum limit of Rs. 1.5 Lakhs.
- Deduction on Interest Paid on Home Loans
Under Section 24 of the Income Tax Act, homeowners can deduct the interest paid on their home loans from their taxable income. This deduction can be substantial, especially during the early years of the loan tenure, effectively lowering your tax liability.
- Tax Benefits on Rental Income
When renting out a property, the received rental income becomes taxable. However, various expenses related to the property, including repairs, maintenance, property tax, and insurance, can be deducted. Additionally, a standard deduction of 30% of the net rental income can be claimed to accommodate other associated expenses.
- Tax Deduction on Repairs and Renovations
Expenditure on repairs and renovations for a property is eligible for a tax deduction under Section 30 or 31 of the Income Tax Act, subject to specific conditions. For example, if Rs. 2 Lakhs are spent on repairing and renovating an apartment in Bangalore, a tax deduction can be claimed, leading to tax savings of up to Rs. 60,000 (assuming a tax rate of 30%).
- Tax Benefits for Property Developers
Property developers can claim deductions for construction-related expenses, including building materials, land costs, and labour charges. Moreover, a deduction for interest paid on loans taken for property construction is also permissible.
Tax Benefits on Real Estate Ownership According to the New Regime
According to the new regime, tax benefits on real estate ownership are applicable for self-occupied, vacant and let-out properties. Here are some of the most important benefits:
- Home Loan Interest Deduction
In the new tax regime, homeowners can claim deductions for interest paid on their home loans from their rental income. This deduction is only applicable to rental properties; no deductions can be claimed for self-occupied properties under the new tax regime.
- Setting Off Losses from House Property
Unlike the old tax regime, the new tax regime does not allow for setting off losses from house property against other income sources. This means that even though deductions for home loan interest on rental properties are permitted, any losses incurred from house property cannot be offset against other income heads.
- Set-Off of Losses from Multiple House Properties
If an individual owns multiple rental properties, losses from one property can be offset against income generated from other rental properties. This implies that if any rental property generates a loss, it can be offset against income from other profitable rental properties.
- Carry Forward of House Property Loss
The provision of carrying forward house property losses has been eliminated in the new tax regime. Under the old tax regime, losses could be carried forward for up to eight financial years.
Other Benefits of Purchasing Apartments in Electronic City, Bangalore
In addition to these tax benefits, buying apartments in Electronic City, Bangalore offers the potential for long-term capital appreciation. As Bangalore is a rapidly developing city with a growing population, property values tend to increase over time. This appreciation can lead to significant wealth creation for property owners.
Considering the current trends in property purchases, Mahendra Aarya emerges as a wise choice if you are searching for flats for sale in Electronic City. Strategically positioned near major highways, this residential complex offers unparalleled connectivity.
Situated at the heart of Electronic City, Mahendra Aarya places you in close proximity to key MNCs including Biocon, Siemens, Infosys, Wipro, TCS, and more. Additionally, it is close to metro stations and bus stops which allows you to avoid traffic and reach your workplace on time.
Its advantages extend beyond just location, with Mahendra Aarya offering various on-site amenities. These include landscaped gardens and a jogging track, a fully equipped outdoor sports area and state-of-the-art clubhouses.Whether you’re in the market for 2 or 3 BHK flats for sale in Bangalore, seize the opportunity by reaching out to us today!
