Tax benefits of investing in real estate you should know about

Buying your own house is a big decision and there’s a lot that goes behind the process. And so the government has made provisions in the tax law and various tax benefits so that the homebuyers do not burden for the same.

Know the tax benefits when buying a home

These benefits can vary according to various factors like the type of property, nature of construction and the loan amount. Here are a few tips that every home buyer must know in order to gain tax benefits when they think of investing in the real estate in India. 

Section 24B

Section 24B deals with tax benefit on the interest paid by the buyer on his home loan. In this case, the maximum tax benefit allowed is Rs. 2 lakh. This home loan need not necessarily be for buying a new house but it can also be taken for construction, reconstruction, renovation or repair.

In case the property for which the home loan is sought is not self-occupied or rented out, no maximum limit has been prescribed and the whole loan interest can be claimed for deduction. Besides, if the property is not constructed within five years (the financial year 2016-17 onwards) from the end of the financial year in which the home loan was availed of, the interest benefit will be reduced from Rs 2 lakh to Rs 30,000.


Under section 80C, the amount paid as repayment of the principal amount for the home loan by the property buyer is eligible for tax deduction. The maximum tax benefit allowed currently is Rs. 1,50,000. It includes amounts invested in PPF account, tax-saving fixed deposits, equity-oriented mutual funds, National Savings Certificate, and Senior Citizens’ Saving Scheme.

The tax benefit is allowed once the construction is completed and the certificate of completion has been received by the taxpayer.

Capital Gains

Taxpayers who cannot invest the capital gains have the benefit of depositing the amount of capital gains in the capital gains account scheme. The deposits have to be made with any public sector bank on or before the due date for proceeding with the income tax return of the year in which the property was sold.


Depreciation as the term means a decrease in the value of assets purchased but in real estate, the term depreciation is not applicable. In fact, investing in property will give you only appreciation in the years to come. We can hardly find depreciation in the property in Mumbai.  Toilets, sinks, roves and essentially all items that comprise a real estate investment are depreciable with the exception of the land itself. The land is a fixed cost and does not depreciate.

So home buyers who wish to invest in properties in the real estate in India need to keep these tips in mind to avail the tax benefits provided by the government.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. Propertypistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.


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