How to Reduce Commercial Property Taxes?

While researching about how to reduce commercial property taxes, I discovered that there are several deductions that one can avail to reduce the commercial property tax. Your income from commercial real estate will be taxed under the "Income from House Property" category. The revenue will be taxable under the heading "Income from Other Sources" if you don't own the business property and have rented it. 

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'Business Income' will apply if you operate your own business out of the commercial property. Many people commit the common error of reporting their rental income as their business income in order to deduct other expenses from the latter. However, it is best to avoid doing so since doing so will only get you into trouble. 

How to lower commercial property taxes?

• Standard deductions:

It is available at a flat rate of 30 percent as a standard deduction for maintenance and other improvements made to your rented business property. Regardless of the price paid for the home, it helps you save a respectable amount on taxes.

• Deduction on loan interest:

You can deduct the whole amount of interest paid on the loan you took out to acquire or build the commercial property, as well as the cost of renovating or building it. Tax deductions are available for the processing fee or prepayment charge in this group. 

However, this is only accessible as of the year you obtain ownership following construction's completion. You can also deduct any interest that was paid before the year you gained ownership of the business property by paying the total amount in five equal instalments. It will begin in the year that construction is finished. 

• Using the commercial property for your profession/business:

No deductions based on fictitious rental revenue can be made in this situation. However, you can still claim depreciation along with interest paid on your loan for buying the property. As a tax deduction, you can write off the actual costs incurred for upkeep and repairs. 

The tax deductions for interest paid on your business property loan are restricted under the new tax system. There is no Section 24 deduction taken into consideration for rented-out properties. You can claim interest and standard deduction, but only until the net annual value — the sum you realise after deducting municipal taxes from the gross rental amount. 

How to save capital gain tax on commercial property? 

To save capital gain tax on commercial property, you can invest the proceeds in residential property or in capital gain bonds of specified institutions and claim an exemption under Section 54EC.

I’d like to conclude my answer here about how to reduce commercial property taxes. I hope this helps:)

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