Buying a house is a dream for everyone who saves towards that and hopes to gain it one day. Though having a house property remains not without abilities. Paying the home taxes yearly is one of the things that you need to complete it. If you require to study how to avoid tax on house loan interest, you can read this guide. It discussed how to record homeownership in the income tax return. If you don’t have any idea about this topic when you want to pay the tax on your home then make sure to take the advice of an Income Tax Return Filing consultant to get the doubts clear.
Know About the Basics of Home Property
House property may be your house, a shop, an office, a building, or any land with any building, such as a parking lot. Individual Income Tax Act will not differentiate within a residential and commercial property. Any property will be taxed under this head ‘income tax from home property’ in an individual income tax return. While a property is utilized for profession or business or for taking out freelancing business – this is taxed supporting the ‘income tax from profession and business’ head. Payments on its maintenance and repair are provided as a business investment.
How to Calculate House Property Income Tax?
a. Define Gross Annual Value (GAV) of the property: This cost of a self-occupied house will be zero. For a let-out home property, this is significant rent collected toward the home on rent.
b. Decrease Property Tax: While paying property tax, it is recognized to deduct the money from the GAV of the home property.
c. Define Annual Net Value: Annual Net Value is equal to Gross Annual Value minus Property Tax
d. Decrease 30% of NAV towards regular deduction: 30% on Annual net value is recognized as a deducting the home property tax from the annual net value under Section 24 law of the Income Tax Act.
e. Reduce house loan interest: Reduction under Section 24 also possible for interest spent during the time of annual tax on home loan availed.
f. Define Income from the home property: The values resulting from your income tax are home property. It is taxed through the slab price suitable to you.
g. Loss from the home property: Suppose you have a own house, considering its GAV will be Nil, maintaining the reduction on house loan interest may result in a decline from home property. That loss may be adjusted on income from different heads.
Tax Advantages on House Loans for Joint Owners:
Joint owners who are co-borrowers with a self-occupied home property may claim a reduction in interest toward the house loan till Rs 2 lakh each. The deduction on primary repayments, including a reduction for stamp tax and registration prices under the Section of 80C in the overall purpose of Rs.1.5 lakh to each joint owner. Those deductions are authorized to claim in the equivalent ratio as this of their own part in the house property.
They may have received the loan together, but unless they are property owners, they will not be entitled to some tax benefits. The situations wherever the house property is maintained by a family and the child and parents together bring up their loan, which signifies to pay only through the child. In that situation, the child person, who is not a co-owner, remains empty of the tax advantages on the house loan. Hence, to maintain the tax advantages on the house property. There will be different types of Income Tax Filing forms one of them is house tax form which need to file carefully without any mistake.