Housing property helps save on taxes, multiply gains
Timing is significant in financial planning especially when you are looking to earn a profit as you need to know when to take advantage of the increase in value. However, it’s equally important to be careful to avoid paying a huge amount as tax. Amit learned this lesson when he sold his house in Delhi in 2012 within 2 years of purchasing. According to him the property was raking him 60% profits, an offer he could not resist. However, he wasn’t aware of the tax implications of his rushed decision. Not only he had to pay a considerable amount of tax on the profit, but also had to let go of the tax exemptions he was availing on his home loan.
If you sell your house within three years of purchase, the tax benefits you are enjoying on your home loan get reversed and are included in your income when you file your income return. After presenting its compassionate side, the Income Tax Act eyes all properties owned by you for taxation. This includes property from which you are earning that is let out property as well as any other property which it is vacant and not rented out (known as Deemed to be Let Out Property or DLOP) as the annual value of the property after standard deductions is taxable under Sec 24B under the head income from house property. However, if you own a farm
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