Tax depreciation on rental property is a significant tax-saving strategy for Indian taxpayers. Depreciation is the term used to describe the slow reduction in a property's worth brought on by aging, obsolescence, or wear and tear. So, exactly, what is tax depreciation on rental property? Property owners can claim depreciation as a deduction from the Income Tax Department, which decreases their taxable income and tax liability.
Can We Claim Depreciation on Rental Property in India?
Residential properties are not eligible for depreciation claims under "Income from House Property." Nonetheless, under "Business Income," commercial properties are eligible for depreciation benefits.
For example, if the cost of a commercial property is Rs. 1 crore and the depreciation rate is 10%, the owner can deduct Rs. 10 lakh from taxable income annually.
Key Points on Tax Depreciation:
Depreciation reduces total tax liability by lowering taxable income.
The Income Tax Department sets the rates, which are subject to change. The rate for commercial properties increased from 5% to 10%.
Claimed depreciation lowers the taxable capital gains on sale by lowering the purchase price of the property.
For instance, if a Rs. 1 crore property has Rs. 10 lakh in depreciation claimed every year for five years, the adjusted purchase price drops to Rs. 50 lakh, lowering capital gains tax. This is definitely a crucial concept for property owners, ensuring both immediate and long term tax benefits.
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What is Tax Depreciation on Rental Property?
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2025-08-26T10:54:02+00:00 2025-08-26T10:54:51+00:00Comment
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