Tips to Save Tax by Investing in Property

Praveen Modi, Mumbai

20th January 2015

Property Tax in Mumbai

home loan

income tax

real estate investment trust

how to save tax

public provident fund

national saving certificate

investment in second property

ppf

nsc

exemption for long-term capital gains

tax exemption on a home loan

investing in reits

save your taxes

tips to save tax

long term capital gains

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Replies (12)

And if you dont want to invest in another property, you have an alternate way out. Section 54EC of the income tax act allows you to claim exemption by reinvesting your capital gains in bonds. These bonds are called capital gain bonds and are usually issued by the National Highway Authority of India (NHAI) and Rural Electrification Corporation (REC).

Abhishek,

9th February 2015

Comment

@Abhishek,
As per the new rules, under the existing tax provisions, tax for long term capital gains is exempt under Section 54/54F if it is invested in either purchasing or constructing a property. The investor however has to purchase a built house within 2 yrs. or construct a house within 3 yrs. of selling the property. It has also been made clear that the purchase/construction must be in India and not abroad.

Joydeep D,

9th February 2015

Comment

You are absolutely right Joy,
Following are some tips to help you reinvest your capital gains. Reinvest in property, invest in capital bonds and invest in specific bank accounts.

These are some of the recommended ways of reinvesting your capital gains. You may also consult your financial advisor to know more ways of saving on taxes on your capital gains.

Abhishek,

9th February 2015

Comment

But if you want to save your taxes, you can reinvest this income into other capital assets within a certain period. Currently, you have up to 3 yrs. to reinvest these capital gains. This will provide you a significant time to reinvest your capital gains in a smart manner.

Joydeep D,

9th February 2015

Comment

Hi,
If you have sold your property or planning to sell your property, you may already know that you will attract taxes on this income. The profits gained by selling a property or other capital assets such as stocks or bonds is referred to as capital gains and this income attracts taxes. If you have held a capital asset for more than 3 yrs., it is considered long term capital gain and attracts about 20% tax.

Abhishek,

9th February 2015

Comment

Whereas investing in REITs is not yet available in the country. hence it wont help you immediately. However, given the governments interest to boost the countrys realty sector and its emphasis on REITs, this option may become a realty soon.

Lalit Verma, Mumbai

20th January 2015

Comment

But Lalit, i heard that an additional rebate on home loan interest of up to Rs 100000 may be utilize under certain conditions such as a loan sanctioned by a financial institution during the 2013-14 financial year or the tax payer not owning any other property.

Shantanu Kumar, Mumbai

20th January 2015

Comment

You are right Shantanu,
How to exempt tax on home loan? This comes as a benefit for people who want to own a property in the fast growing Indian real estate sector. The government has allowed tax exemption on the home loan interests of up to Rs 1,50,000 annually. If the property is co-owned, each owner may claim a rebate on their respective share of loan interest. Hence, it is a good idea to co-own a property with your spouse or another family member.

Lalit Verma, Mumbai

20th January 2015

Comment

Exemption for long term capital gains:- The income tax department allows an exemption on investing capital gains. Tax exemption may be obtained by reinvesting capital gains in other capital assets within a specific period. The recent budget increased this period from 1-3 years. This means that you have 3 years to reinvest your capital gains into other assets without being taxed.

Shantanu Kumar, Mumbai

20th January 2015

Comment

These are Investment in a second property, Exemption for long-term capital gains, Tax exemption on a home loan and investing in REITs etc.
Investing in a second property apart from an owned property is a good idea from the point of tax exemption. The advantage you have in investing in a second property is the tax exemption you obtain for interest on the loan without an upper limit.

Lalit Verma, Mumbai

20th January 2015

Comment

Yes Lalit,
It may come as surprise for many that investing in property too can help you save on IT. The Government of India, in its last budget session, brought in new property related policies in order to encourage the common man to invest more in the realty sector and save on taxes. Hence, if you havent planned your investments yet, here are few tips that can help you save on IT by investing in property.

Shantanu Kumar, Mumbai

20th January 2015

Comment

March month is the season of filing income tax (IT) returns. Most people would have already planned their investments so that they can save on their income tax. There are several instruments such as public provident fund (PPF), insurance, National Savings Certificate (NSC) among many others available to help you save on taxes.

Lalit Verma, Mumbai

20th January 2015

Comment