5 Important Things About House Property and Taxes

Purchasing a home is one of the most common dreams in India. Being able to achieve this dream is indeed a huge achievement. But every big success comes with its share of responsibilities too. With regards to purchasing a home, one of the biggest responsibilities is that of paying taxes.If you have recently purchased a home, especially with the help of a home loan, it is time for you also to understand the tax implications of a house property. Here are some important things you should know-

• Section 24- Deduction of up to Rs. 2 lakhs in a financial year on the interest part of the loan if you and/or your family reside at the property. The entire interest portion can be claimed as a deduction if the property is let out.
• Section 80C- The principal part of the loan repayment is eligible for a tax deduction of up to Rs. 1.5 lakhs under Section 80C.
• Section 80EE- Additional tax benefit of up to Rs. 50,000 for first-time homeowners.

• You are the owner of the property
• The property is either a house, land, or building
• You should not be using the property as an office for your profession or business

1. With regards to taxation on the income generated from any property, there is no difference between a residential property and a commercial property. So, irrespective of whether you are earning income from a residential property, a shop, office, or even from land, the income will be taxed under the ‘Income from House Property’ head.Also, there can be three categories of every type of property- Self-Occupied, Let-Out, and Deemed to be Let Out.There are multiple sections under the IT laws for individuals to save taxes if they have purchased the property with the help of a housing loan . Here are the sections you should know about:
2. If you are earning income from your house property, you should pay taxes on the same. Your total income from the house property in a year will be added to your Gross Total Income if-
3. Also, if you have more than one property and you live in one, and the other property is vacant, it would be treated as ‘deemed to be let out’ property. In such cases, the fair rent, as per the current market will then be used as your income from house property.If you are a salaried employee, you will be required to submit your housing loan interest certificate to your employer. The employer will then adjust your Tax Deducted at Source (TDS) accordingly. If you do not submit this interest certificate to your employer, you can still claim this deduction. For this, you will then have to request a refund at the time of filing your ITR.In case if you are a self-employed professional or a freelancer, you will have to yourself calculate the deductions and adjustments for paying advance tax.If you and your spouse are both working, you can consider the option of taking a joint loan to save more on house property tax . By taking a joint housing loan, both you and your spouse can then claim the available loan deductions on the interest and principal repayment.Joint loans can also be taken along with a blood relative, including parents and children.

It is great that you were finally able to fulfil your long-awaited dream of being a homeowner. Now that the goal is accomplished, it is time for you to be a responsible homeowner.
Understand the tax implications of being a property owner to pay appropriate taxes, be a responsible citizen, and contribute towards the growth of our country.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.