Author: waterscapeadm

Your Guide to Taxes on Vacant Properties

Posted on October 5, 2020

vacant properties tax guide

While we can say that real estate is one of the best asset classes for investment, we have to bear in mind that ownership comes at a cost. If you are someone who owns more than one property, there is a likelihood that you might attract various taxes and levies. Apart from the property tax and wealth tax that you pay on your real estate assets, you also have to pay tax on the rental income if you let out your property. However, did you know that you also have to pay income tax on a property if it is left vacant? Here is a demystifier.

Why pay taxes on a vacant property?

Though the tax under the head “income from house property” is supposed to be on income, it is a tax levied not on rent but on the basic capacity of a building to yield income. Termed the “annual value” this is the sum for which the property might reasonably be expected to be rented out a year to year basis. The tax, here is calculated on a notional basis. To put it otherwise, the annual value of the property is the amount that a property can earn when it is rented out in a year.

What are the deductions?

You can claim deductions like municipal taxes that are to be borne by the landlord and not the tenant. The standard permissible deduction limit is set at 30% of the annual value of the property for repairs and maintenance.

Calculating tax on vacant property

Step 1: There are four factors considered for calculating the gross annual value of the property.

These include:

The actual rent received on the property (not applicable if the property remains vacant throughout the year).

The municipal value of the property as determined by the local civic body.

The fair rent of the property, which is similar to what other properties are fetching in the same locality.

The standard rent if the property in question falls under the purview of the Rent Control Act.

Step 2: Deduct municipal taxes

Step 3: You get net annual value, also known as NAV

Step 4: Deduct standard deductions from the net annual value

Step 5: Include the result under income from house property

What should you do?

Remember that you are free to specify any one of the properties that you own to be self-occupied, you should first calculate the annual value of each property and then choose the one with the highest annual value as self-occupied. You can claim all the deductions while calculating the annual value.

At Fortius Infra, we offer you a complete end to end guidance for all your home-related woes. Contact us for more details.

Everything You Need to Know About Section 80EE

Posted on October 5, 2020

80ee things to know

So, you are all set to invest in the house of your dreams. Among the many things you will have to consider, there is one that takes the top priority – especially if you are a first-time homeowner. You are entitled to certain benefits under the tax regime. A little research and a little thought into it can help maximize benefits.

What is Section 80EE of the IT Act?

Section 80EE deals with tax deductions under the Income Tax Act, 1961. Section 80EE that came into effect in FY 2013-2014 and applied to FY 2014-2015 allows first-time homebuyers to avail of tax benefits on interest paid on home loans. Aimed at assisting resident homeowners’ avail of income tax benefits on the interest paid on their home loans and was limited to a maximum value of 1 lakh. This Section was later upgraded to include FY 2016-2017 and allowed an individual borrower to claim tax deductions of up to Rs.50,000 per year until the end of the tenure. This implies that the deduction is granted for the loans made between April 2016 and March 2017.

Are you eligible?

There are certain conditions applicable to the homebuyer to enjoy the deductions. The deduction can be claimed by individual taxpayers on residential properties that are purchased either individually or jointly. If you take a joint home loan, with your spouse, to purchase the property and the installments are paid by both of you; then both parties can individually claim deductions under this act. Tax benefits under this section are not applicable for units such as Hindu Undivided Families or HUF, Association of Persons or AOP, trusts and companies, and so on. You have to be a first time home buyer who has taken a loan from a recognized financial institution to benefit from deductions under Income Tax Section 80EE. The deduction applies on per person basis as opposed to a per property basis. The benefit can be claimed irrespective of the fact that it is self-occupied by the taxpayer or rented out to someone else.

What is the scope of Section 80EE?

The benefits offered in Section 80EE are over and above the ones that are granted in Section 80C and Section 24. However, the borrower should note that they can only enjoy the benefits under Section 80EE after exhausting the waiver provided under Section 24. Section 80EE will only work for someone who is paying around Rs 2.25 lacs as interest on their home loan in a financial year for the first time.

If the property has not been handed over to the homeowner, then they can claim the deduction while living in the rented place since the Section 80EE does not specify that the property must be self- occupied. The deduction under this section can be claimed by both the residents and the non-residents of the country.

What is Section 80EEA

The union budget 2019 has introduced a new section 80EEA to extend the tax benefits of the interest deduction up to Rs 1,50,000 for housing loan taken for affordable housing during the period 1 April 2019 to 31 March 2020. The individual taxpayer should be a first-home buyer and should not be entitled to deduction under section 80EE.

The entire process can get intimidating and confusing if you are a first time home buyer. At Fortius Infra, we can introduce you to a professional consultant who can help guide you. They may charge a nominal fee for their services, but it will also ensure that the entire process will run smoothly.

Who Should a Homebuyer Approach? NCDRC, RERA, NCLT

Posted on August 26, 2020

NCDRC, RERA, NCLT

Until a decade ago, a consumer had to approach the consumer if they wanted to redress their real estate issue. And consumer courts were slow and rather not efficient enough to resolve their issues. This gave rise to a series of laws and acts to give more voice to the consumers. Let us see what each of these terms stand for and which is the most preferred redressal forum for the consumers now.

How to Pre-close a Home Loan in India?

Posted on August 18, 2020

Steps to Pre-Close Home Loan in India

Owning a home is a cherished dream and availing a loan is one of the easiest ways to turn this dream into a reality. However, what if you come by a windfall and want to pay off the loan well before the stipulated time? Will the banks allow it? The answer is yes, and this process is known as pre-closing the loan or foreclosure. Read on to know the most important things you have to keep in mind before you do this.

Trends in Smart Homes

Posted on July 13, 2020

Trends in Smart Homes

The newer breeds of homes are increasingly coming with internet-enabled smart home technology. Such homes are called ‘smart homes’ and serve the purpose of making day-to-day living much easier, safer and more entertaining, comfortable and economical. Evolving technology and Internet of Things (IoT) is ensuring that there are more home automation and smart home products flooding the market than ever before. What’s more, most of these smart home products are connected to smartphones, making it possible to control the environment of your home from virtually anywhere. Here is a look at some of the new trends in 2020:

Do’s and Don’ts of Vastu

Posted on July 11, 2020

Do’s and Don'ts of Vastu

Vastu is an age-old science that focuses on designing buildings in such a way that they benefit the people inhabiting it. Its purpose is to use natural elements and create a flow of positive energy into the interiors of your home to help you and your families live a healthy, happy and prosperous life. It involves a set of rules and principles that are based on old practices, scientific facts and Vedic scriptures. These rules are still as relevant and applicable today as they were numerous centuries back. But you will first have to learn a few basics of Vastu. Here are a few simple do’s and don’ts of Vastu to get you started:

Home Loans – Fixed Vs. Floating Interest Rates

Posted on June 22, 2020

Home Loans - Fixed Vs. Floating Interest Rates

Buying your own home can be a heady experience, but it does go with its share of significant impact on your finances in the coming years. Since most people use a home loan to pay off the cost of this large investment, you will first need to make some important decisions relating to your finances. The home loan comes with the option for going with a ‘fixed’ or ‘floating’ interest rate. Since this could have an important impact on your finances, it requires careful consideration. Here’s a look at some important features of fixed and floating interest rates to help you choose: