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Added Mar 18 2015

Tax-saving tips for buying and selling a property

A joint loan while buying is beneficial; make full use of deductions available while selling.

Irrespective of class or income, Indians are fond of buying gold and real estate. Purchasing and selling the metal is a straightforward game but a property, through its lifecycle (buying, owning and selling), can be taxing. If played right, you can reduce the tax outgo.

While buying

A house is the biggest purchase most people make in their lifetime and the government realises this. To give buyers relief, the government has allowed income tax (I-T) deductions if the property is bought on a loan. Under Section 80C, the borrower can claim deduction of up to Rs 1.5 lakh.

Tip: To take advantage of current laws, a couple should take a joint loan in equal proportion. This will allow each to claim full tax deductions available for the principal and interest. This also applies to a child and a parent.

While you own it

If it's the borrower's only house and self-occupied, there's no taxation. For those who have two or more houses and these are neither let out nor occupied, the taxation can get tricky.

Tip: While calculating the notional value of a second home, you are allowed to claim few deductions such as municipal taxes. Also, an owner can claim deduction of a sum equal to 30 per cent of the value of the house property towards repair and maintenance charges.

While selling

When a person sells a property, he or she needs to pay tax on the profits made. If sold within three years of acquisition, the seller needs to pay short-term capital gains tax (STCG). In this case, the profits are combined with the income and taxed on the I-T slab rate.

Tip: While calculating STCG and LTCG tax on sale of property, one can deduct the money spent on improvement and also cost for acquiring the asset such as stamp duty, legal fees, and payment of brokerage.

  • Hkaur new neighbor

    Hello there, is this info valid in US real estate?

  • L

    Instead of Jack Jack, today we have new user Pamela Almeida giving Thanks to spam posts to make them look more legit.

  • HarleyGrrl Why YES! People actually DO live on Clark St!

    noticed that too

  • Ravens Yes.I can fix that.

    Native American Indians? Or the ones from India? If it's the ones from India, I don't think they consume SPAM.
    This is for Westhill Consulting
    This is an easy one. They don't use a Metric language.

  • Bill Near Rockwell L

    Hey Jordy Neober- I got your STCG and LTCG - right HERE!

  • Which God? God is Beautiful

    God blames Comcast.

  • Ravens Yes.I can fix that.

    Hey Jordy Neober. I think I contracted an STD from your STCG & LTCG. Just thought others should know.
    BILL. I think your batting clean-up.

  • Bill Near Rockwell L

    There are 5 lakh reasons I hate spam.

  • HarleyGrrl Why YES! People actually DO live on Clark St!

    Ohhhh GEEZE now who is Estaban????

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Posted to Ravenswood

This was posted to Ravenswood

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