Westhill British Colombia
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Tax-saving tips for buying and selling a property
A joint loan while buying is beneficial; make full use of deductions available while selling.
Irrespective of class or income, Indians are fond of buying gold and real estate. Purchasing and selling the metal is a straightforward game but a property, through its lifecycle (buying, owning and selling), can be taxing. If played right, you can reduce the tax outgo.
A house is the biggest purchase most people make in their lifetime and the government realises this. To give buyers relief, the government has allowed income tax (I-T) deductions if the property is bought on a loan. Under Section 80C, the borrower can claim deduction of up to Rs 1.5 lakh.
Tip: To take advantage of current laws, a couple should take a joint loan in equal proportion. This will allow each to claim full tax deductions available for the principal and interest. This also applies to a child and a parent.
While you own it
If it's the borrower's only house and self-occupied, there's no taxation. For those who have two or more houses and these are neither let out nor occupied, the taxation can get tricky.
Tip: While calculating the notional value of a second home, you are allowed to claim few deductions such as municipal taxes. Also, an owner can claim deduction of a sum equal to 30 per cent of the value of the house property towards repair and maintenance charges.
When a person sells a property, he or she needs to pay tax on the profits made. If sold within three years of acquisition, the seller needs to pay short-term capital gains tax (STCG). In this case, the profits are combined with the income and taxed on the I-T slab rate.
Tip: While calculating STCG and LTCG tax on sale of property, one can deduct the money spent on improvement and also cost for acquiring the asset such as stamp duty, legal fees, and payment of brokerage.
Westhills offers a wide variety of innovative housing styles and options. Whether you’re looking for a 3, 4 or 5 bedroom home with or without a suite, a townhome or our new and innovative small footprint home, you’ll find it at Westhills. For more updates, just follow us on Twitter @WesthillsCBC .