• Sat. Dec 9th, 2023

These income tax saving strategies can save money for real estate investors

Income tax methods designed specifically for real estate investors, such as depreciation deductions, and passive income laws, are critical for maximising investment returns and generating income in the real estate sector.

Those who invest in real estate should be aware of additional tax-saving options, such as using self-directed retirement funds, maximising deductions for upkeep and repair charges, or capitalising on the advantages of having real estate professional accreditation

“To effectively capitalise on these opportunities, due to the complexity of the tax law, it is essential to engage closely with competent tax specialists that specialise in real estate,” said LC Mittal, Director, Motia Group.

Depreciation is one of the most advantageous tax strategies for real estate investors. Depreciation is the idea when assets, including properties, lose value over a period of time. Investors can deduct a certain amount of this value loss as an expenditure on their tax returns,lowering their total taxable income. “Real estate investors may dramatically reduce their tax obligation by correctly using depreciation deductions, enabling them to continue to keep more of their earnings,” said Gunjan Goel, director, of Goel Ganga Developments.

In developing countries like India , the Real Estate sector is one of the dominant sectors for growth prospects.

“Investment in Raw / Agriculture Land is always a first choice for the investors as there is No Tax for the sale of Agricultural Land . Capital Gain Tax as per Indian Income Tax Act would not attract to the Agricultural Land as it does not fall under the definition of Capital Assets as per section 54 of IT Act,” said Vijay Chaudhary, Chairman of Ram Rattan Group.

There is a defined period of investment in real estate properties for saving or getting the exemption of capital gain taxes in India under section 54 or 54F of the Income Tax Act 1961, added Vijay Chaudhary. 

Further for generating passive income also , Agriculture Land has become the sweetener for the Investor as there are new options coming up like , organic farming , fractional holdings, and assured rental from community farming !

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Updated: 12 Jul 2023, 02:11 PM IST


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