Tax On Vacant Property: Know All The Legal Aspects
by Shruti Sharma Content CuratorOwning property in Mumbai
or any other part of the country is among the best investment options. However,
it also involves expenses and one of these is the payment of taxes. If the
homeowner gives the house on rent, then tax also has to be paid on the rental
income. However, many people are unaware that income tax has also to be paid on
vacant property.
Taxing Vacant
Property
Under the ‘Income for
house property’, the tax is levied keeping in mind the potential of the given
property to generate income for the owner and not on the rent that is being
generated from the property. Therefore, the tax is levied on people who have
more than one property. In the case of self-occupied houses, no tax is imposed.
This is mainly because the owner is already living in the property and therefore
cannot rent it out. Thus the annual value of the property is considered to be
nil.
Exemptions on
properties that are self-occupied
If the property is
self-occupied, then no tax will be levied on a notional basis. The individual
can also avail deductions under Section 80C of the Income Tax Act on the
registration fee, stamp duty and many other expenses that are involved in the
transfer of property. So for individuals living in their home have the
advantage of not paying any income tax. But, those possessing more than one
property which includes only the built-up premises can determine on which
property they can pay taxes. The individual can show any of his property as
self-occupied under the provisions of the Income Tax Act. Those possessing more
than one property should first determine the net value of all the properties
that they own. Of these, the one that has the highest annual value should be
chosen as self-occupied.
The best way to reduce
your overall tax outgo is by becoming the joint owner of a property. This will
reduce your tax burden as the number of taxpayers would increase. If you already
own a property and have to buy another house or office, purchase it in the name
of your spouse or any other family member. This way your tax liability would be
substantially reduced.
Paying income tax on
vacant property is mandatory, but there are ways to reduce the overall tax
outgo. By making wise choice regarding your properties and going in for joint
ownership you can considerably lessen your tax burden. If you are planning to
buy property for self or as an investment option you can choose the most
luxurious 2 BHK
flats in Goregoan East, Mumbai. These are well-structured, spacious
and worth every penny.
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Created on Dec 2nd 2019 23:48. Viewed 310 times.