How to make the dream of buying a house a profitable investment?

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buying a house


Buying a house now a day is considered a safe investment. The speed with which the real estate business is flourishing, buying a house is considered to be a good money making venture. With various tax benefits offered by the government on buying a house, it has become easy to reduce the cost of buying and saving money on selling the house. There are many benefits to buying a house, especially for the first time owner.


How The House Is Taxed?


An annual income value of any house is estimated, and on this annual income the owner is taxed. If a person owns more than one house then the tax is not charged on the house which is self-occupied. The income from the self-occupied house is considered to be nil. In case of more than one house property, only one house is considered to be self-occupied, and tax is charged on the other house of the maximum housing value. To make the dream house the source of income forever, people need to be prudent about certain tax considerations as given below.


Income Tax concession On The First House


Property tax for the first home is fully deductible


Mortgage interest taxes are tax deductible. But this deduction is restricted to a certain amount as far as a self-occupied property is concerned where the annual value is considered nil. However, there are no restrictions on interest deduction in other cases. In case the interest deduction is more than the net annual value then the excess interest is considered a loss. In case the income is not sufficient, such loss can be carried up to 8 years forward.


Selling A House


Under the I-T Act, a residential house property is treated as a capital asset. If you own a house for more than 3 years, then the house is considered as a long-term asset, for less than 3 years it is estimated as a short-term asset. On the sale of a long-term asset only 20 per cent tax is charged on the capital gain arising from the sale. In case of short-term asset, normal tax rate is applicable. Capital gain is calculated as the difference between the cost of acquisition and the price at the time of selling. In the case of sale/transfer of a house property that has been in accommodation for 3 years or more, then the cost inflation index is proportionately compensated with the increased acquisition cost.


Wealth Tax


For those house properties that are occupied for conducting business or for professional reasons, used as stock-in-trade, or given on rent for a period of more than 300 days in one year there are specific exclusions. The taxable wealth for the same must be exceeding Rs 30 lakh and the rate of paying Wealth tax is at 1%.


Stamp Duty


Stamp Duty is charged at the time of both buying and selling a house. In case of the buyer, the stamp duty is added to the cost of acquisition of the house property for the purpose of calculating any gain on resulting sale/transfer. Before owning a house, people must keep in mind the Income Tax rules and should al so know the ways to reduce such taxes. The information given above will surely help the buyers in making smart investment.

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10 Comments

  • Admin

    Gunjan aab

    11 October, 2018 at 2:36 pm

    Amazing Blog, This Information Is Very Useful and Thank's For Sharing. best real estate website in gurgaon

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  • Admin

    Advise Debt†††††††††††† ††††††††† †††† †††††††††

    14 March, 2012 at 11:00 am

    Yes, with the current economy fluctuations Investing on lands and house has become the safest investment. Iím planning to buy my own sanctuary, but I was in doubt whether itís profitable to invest money on a house. This post gave me a positive motivation.

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  • Admin

    Findghar

    13 March, 2012 at 1:13 pm

    Great information,thanks..

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  • Admin

    Ankan

    06 March, 2012 at 12:51 pm

    Wow! This is a good list. Thanks for sharing it.

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  • Admin

    Ankan

    06 March, 2012 at 12:52 pm

    Nice ! great article ! thank you..

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  • Admin

    bharat

    01 March, 2012 at 1:02 pm

    It's really useful information given by you, thank you.

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  • Admin

    Flats for sale in Indirapuram

    22 February, 2012 at 9:28 am

    Nice Blog!

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  • Admin

    Deborah

    17 February, 2012 at 10:56 am

    Thank you for sharing such a detailed post. I will be sharing this post on Twitter as well.

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  • Admin

    Aditya Luxuria Estate

    15 February, 2012 at 7:48 am

    Hi, Your Blog is Very Good...

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  • Admin

    Ankan

    14 February, 2012 at 11:04 am

    Nice post.. Solid information..

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