[vc_row][vc_column width=”2/3″][vc_column_text]Here are a few tax tips for real estate investors to be taught of at the time of the year when people mostly planned their investments and are looking for multiple options to save their income tax. There are many ways such as National Savings Certificate (NSC), Public Provident Fund (PPF) and many others which will help you to save on taxes. It may come to you as a surprise, that investing in a property can help you in saving income tax.
With so many tax tips for real estate investors in today’s world, it’s no surprise that investment on a property continues to be India’s desired method of investment. With tax upon us, it’s vital for investors to understand their responsibility before filing a claim with the tax office.
The Government of India, in its last session of budget, introduced new property-related policies in order to encourage the common man to do their investment more in the real estate sector.
Whether you are working with an accredited accountant or having a plan to submit your return yourself, here are the tax tips for real estate investors that will help a property investor to get the most out of tax return.[/vc_column_text][vc_row_inner][vc_column_inner][vc_column_text]
[/vc_column_text][dt_vc_list dividers=”false”]
Be aware of the income you need to declare
Above all, you need to have a clear idea of the income you’re required to state. The main form will always be the rent payments you receive, but you will also need to attach any additional income such as money from the insurance pay out, the bond you are entitled to keep or any lump some additional pay out related with your property.
Acknowledge what you claim
A significant number of tax tips for real estate investors,deductions can be claimed by the property investors, and this could end up saving you thousands by knowing this ahead of time. Expenses such as
- Insurance
- Management fees
- Council rates
- Advertising for tenants
- Gardening costs
- Appropriate travel expenses to monitor the property
These can be claimed, but it’s a good idea to check with your accountant for a detailed list.[/dt_vc_list][vc_column_text]
[/vc_column_text][vc_column_text]
Recognize what you can’t claim
Expenses that the tenant are paying can’t be claimed, neither can it be gathered. These expenses are considered to be your own personal use of the property.
In most Indian states, you can’t claim expenses relating to disposing or acquiring of the property, such as the conveyancing fees, the purchase cost of the property, building inspections, advertising costs and stamp duty. None the less, these costs can form part of the cost base of the property – which brings us to the next point!
Work out the cost base
As already mentioned above, the cost base is made of the expenses related to the purchase and sale of the property which is invested on. Working out the right cost base is important, as it can affect the capital gains tax you may need to pay. The base of the cost is deducted from your overall proceeds and the amount which is remained is considered to be the gross capital gain. Although the amount of tax that you are required to pay on this figure is depending on various factors.[/vc_column_text][vc_column_text]
[/vc_column_text][vc_column_text]
Don’t forget to claim your interest
The interest you are paying on a loan that has been used to purchase an investment property can be embraced in your claim. You will be eligible to claim the full amount if you have one designated loan for the property. But you need to clearly identify which interest payments are for the property purchase if you have an account which you used for the property as well as personal uses.
Take note of any repairs
After completing the first 12 months of owning the property, you may be eligible enough to claim any further repair cost during the period in which the property is under the lease. This might include the maintenance or repair such as roofing, plumbing, electrical, guttering and fencing. [/vc_column_text][vc_column_text]
[/vc_column_text][vc_column_text]
Interest which pre-paid
When your annual income is on the verge of slipping into the next tax bracket and you have a fixed rate of loan, it is often considered most likely for you to pre-pay your interest for the next 12 months, in the return this will allow you to claim the deduction in the year which you’re filing your tax return.
Detect if you’re free from the capital gains tax
When the time comes to sell most invested properties are subjected to capital gains tax, few tax tips for real estate investors are there where the person will benefit who is investing in the property.
Make sure you save your records
Finally, the tax office requirement is that the property investors hold on to records which includes their contract of purchase, all the documents relating to the capital gains tax, evidence of any expenditure on the improvement of the property and financial records. These documents all donate informing your cost base and are most likely to be required in the upcoming years. Keep them somewhere safe so you most likely avoid any loss of income when and if you eventually decide to sell the property.
It is always worth consulting an expert for information and advice about how you can maximise your tax benefits when it comes to property investment. Like any other investments, there always includes some amount of risk, and taking proper advice on finances is advisable. Not only will it protect you as well as it will ensure that you are keeping your cost level minimum.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][vc_column width=”1/3″][vc_column_text el_class=”post-contact-form”][fc id=’2′ align=’center’][/fc][/vc_column_text][/vc_column][/vc_row]