How To Lower Your Property Taxes?

Hey Friend,

Property tax is the sum that a landowner must pay to the local government or municipal body in their area. Every year, the tax is due and payable. Real estate assets include real estate, commercial real estate, and residential real estate that is rented to third parties. Capital gains tax is the fee imposed on the profit realised from the sale of a property. Capital gains tax, if improperly managed, can result in severe financial loss. This ultimately raises the query, how to lower my property taxes? 

The government levies property taxes on all movable property that a person owns. These real estate assets could consist of apartments, office space, and other locations that are rented out to other people. It is also referred to as house tax.

Using the proceeds from the sale of a property is a simple solution, but the new home must be purchased within two years of the selling date. The amount of capital gains tax on real estate can be decreased by using the money from the sale of a property to construct a home.

However, to learn more about how to lower property taxes on your home, I would like to highlight the deductions that would help lower property taxes.

"Deductions from income from dwelling property" is the title of Section 24. 

• The rent you earn from renting out your home or homes will be counted toward your income.

• If you own more than one home, the Net Annual Value of all of your homes—aside from the one you live in—will be taken into account when calculating your income.

• If you only own one home and live in it, the revenue from real estate will be counted as NIL. After deductions made under Section 24, any income obtained from rent and the annual value of additional homes will be taxed.

The Income Tax Act's Section 24 allows for two different sorts of deductions:

• Standard deduction: 

Amounts up to 30% of the net yearly value are excluded from taxation under this exemption, which is available to all taxpayers. If you live in the sole residence you own, this rule does not apply to you.

• Loan interest:

If you borrowed money to buy, build, or renovate a home, the interest you paid on the principal amount of the loan is not subject to taxation. Subclauses in this group include

• You may be eligible for exemptions of up to Rs. 2 lakh if the loan was taken for a self-occupied home.

• You may still be able to claim the interest if you took out a loan to pay for a property’s acquisition or construction (not renovation) of a property before actually doing so. In five equal instalments beginning in the year, the house is purchased or the construction is finished, you can claim a deduction for the interest paid before the purchase or construction is finished.

• You cannot claim a tax exemption if the loan is used to renovate or rebuild a home until the work is done.

To qualify for this deduction, you must compute the interest payment due to the bank or other financial institution from which you borrowed the money, in addition to the principal payments. You are still eligible for the full annual interest amount, regardless of whether you have paid the financier the required sum.

• If the property is not your primary residence, you may exclude the entire amount of interest you are paying, with no higher limit.

• You may only claim a tax exemption on interest payments up to Rs. 2 lakh if you are not the owner of the home and live elsewhere due to your employment or business, or if you rent a home in the city where you work.

• There is no deduction for any brokerage fees or tenant placement fees.

• For you to be eligible to deduct the maximum amount of loan interest, you must purchase the property or finish construction on it within three years of taking out the loan.

• You can only claim Rs. 30,000 instead of Rs. 2 lakh if the building or purchase is not finished within three years.

• For the loan you are taking, you must have an interest certificate.

Finally, to conclude about how to get your property taxes lowered, I would mention the

Under Section 80C of the Income Tax Act, those who buy a new home are eligible for deductions. Stamp duty and registration fees, which may amount to about 10% of the entire cost of a house, may be deducted under this condition. The maximum amount of deductions that may be claimed under this clause is Rs 1.5 lakh.

People may also deduct any additional costs incurred in the process of transferring property. Owners should be aware that this only applies to brand-new residential properties.

I would like to conclude here as I believe this suffices your query about how to lower my property taxes. I hope this helps:)

Read More:

• Standard deduction of up to 30% of the net annual value, which is available to all taxpayers except those who live in the sole residence they own.
• Additionally, you can also consider using the proceeds from the sale of a property to construct a new home within two years of the selling date, which can help lower the capital gains tax on real estate.