Property Tax - List of Properties that are Income Tax Free

Everyone dreams of owning a home. Whether you're a homeowner, have inherited an ancestral property or plan to buy a home in the future, you need to be aware of the various tax liabilities of a house property.

According to income tax rules, there is no differentiation between a commercial and residential property. All properties are taxed under the category, “income from house property,” while filing individual income tax returns. Generally, you must pay taxes for the income you generate from house property.Before FY 19-20, if an individual owned more than one-self occupied house property, only one home was tax-exempted. The other was considered as let-out for taxation purposes. However, from FY 19-20 onwards, two houses can be considered as self-occupied. Also, note that while selling an immovable property valued at more than 50 lakhs,

is deducted by the buyer and not the seller.However, specific properties are tax-free. The income you generate from these properties need not be included in your overall income for tax calculation purposes.

• Revenue generated from properties in and around agricultural lands is considered a part of the agrarian income under Section 10(1) . For instance, if you lease or rent a farmhouse, then you don't have to pay taxes on the generated rental income from the farmhouse.
• Income from property used for one’s business or profession are exempted from tax under Section 22. Let’s say, you use a property that you own as an office for your business. You don’t have to pay taxes for it.
• Income from a property that is let-out/leased to local authorities is tax-exempted under Section 10 (20).
• Income from a property that is let-out/leased to an approved scientific research association is tax-exempted under Section 10 (21).
• Income from a property of medical institutions, educational organizations are tax-exempted under Section 10(23C).
• Income from property that is held under trust wholly for the usage of charitable institutions or religious purposes is tax-free under Section 11 (1) (a).
• The value of a palace possessed by an ex-ruler of the princely Indian states is free from taxation under Section 10 (19) (A). Note that this applies only to one palace. If the ruler possesses more than one palace, the income from all other palaces is taxable.
• Income from the property of a certified trade union is tax-free under Section (10) (24).
• Income from the property of a political party is tax exempted under Section 13A.
• If you own a property that you use as your residence, then the annual value of the property is not included in your taxable income under Section 23 (2).

If you own any of the properties mentioned on this list, you can claim tax deductions and reduce your overall income tax burden.Ready to make the most of your money? Start your tax planning journey now!

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.