You can avoid big problems by keeping the rules in mind while buying property

Keep These Things in Mind While Buying Property

Investing in a house or land is a big decision. Therefore, it is important to be aware of tax laws along with documents like property documents, search report, title deed. Because there are many such provisions in the tax law, which if not taken care of, can lead to trouble. If you are aware of these laws, tax can also be saved in the purchase and sale of the house. So let's know the five important rules related to property tax...

Keep these five tax rules in mind while buying a property

TDS required on stamp duty of more than Rs 50 lakh

As per Section 194-IA of Income Tax, if any person buys an immovable property, the stamp duty value of which is Rs.50 lakhs. If it is more than Rs. 1000 then TDS is required to be done on it. According to income tax, TDS at the rate of 1% has to be deducted from the purchase price of such immovable property and stamp duty, whichever is higher and deposited with the Income Tax Department.

Do not pay for property purchase in cash

There are some restrictions on cash transactions in case of immovable property. As per the rules, more than twenty thousand transactions have not been allowed. According to the Income Tax Act, if earnest money (token money) is also given for the purchase of property and this amount is more than twenty thousand, then the transaction should be done through account pay cheque, demand draft or bank channel only.

There should not be much difference between transaction value and stamp duty

If the stamp duty of a property is more than 110% of the actual value of that property and the difference in price is more than Rs 50,000, then the difference amount is considered as a gift to the buyer. As per rules, tax is levied on it. If the stamp duty of the property is Rs 60 lakh. Its. Registry is of Rs 40 lakh. Difference Happens in which is Rs 20 lakh. The difference will be the buyer's income. There will be tax on that.

Get property registered in joint names

If both husband and wife are income tax payers. Then, on taking a home loan to buy a house in joint names, each member gets a deduction of up to a maximum of Rs 2 lakh on interest. At the same time, maximum of Rs 1.50 lakh can be availed under Section 80C on principal amount. Different deductions can be availed. This will result in huge savings for both of them in income tax.

Income tax exemption on stamp duty

Very few people are aware that a deduction of up to 1.50% can be claimed under Section 80C on the stamp duty and registration charges paid for the purchase or construction of a house. This deduction can be claimed only once and in the same financial year in which the stamp duty and registration is deposited.