6 Ways To Save On Your Income Tax In 2024-25.

As a real estate investor or property owner, knowing how to fine-tune your income tax savings will dramatically change your financial wellbeing. Considering the constantly changing tax environment in India, appropriate knowledge will enable you to minimize your tax liability while adhering to the current laws. Six effective ways have been presented below to reduce income tax for the financial year 2024-25.

1.Leverage Home Loan Benefits (Section 80C and 24(b)):

One major tax-saving instrument is real estate investment financed by a home loan. As per Section 80C of the Income Tax Act, a deduction up to ₹1.5 lakh relating to the principal repayment of the home loan is allowed. This benefit is not only restricted to self-occupied properties but also applies to let-out or properties in the process of construction, provided that construction is completed within five years.

Section 24(b) also allows a deduction for interest paid on home loans. The maximum deduction for self-occupied property is ₹2 lakh per annum and there is no limit for let-out properties. Such a dual benefit makes the purchase of a house on loan a wise tax-saving approach. Keep the certificates of interest and principal repayment issued by your lender to claim these deductions.

2.Utilize Deductions for Rental Income:

As a property owner renting out residential units, you could significantly reduce your taxable income through various deductions. Under the heading “Income from House Property,” the rental income you receive is taxable, but a number of expenses are allowed as deductions. Property tax payments are deductible from gross rental income, thereby increasing net taxable income.

You can also claim a standard deduction of 30% on the net rental income for repairs and maintenance, irrespective of actual expenditure incurred. For example, if the annual rental income is ₹6 lakh and property tax paid is ₹50,000 then the net income comes out to be ₹5.5 lakh. Once a 30% standard deduction is applied, only ₹3.85 lakh remains taxable. This method maximizes savings for real estate investors.

3.Invest in Real Estate for Long-Term Capital Gains Benefits:

Property may sell for a huge amount but it attracts capital gains tax. To reduce this tax, one should hold the property for more than two years to get the benefit of long-term capital gains (LTCG). LTCG on real estate is taxed at 20% with indexation, thereby adjusting the purchase price for inflation and hence reducing the taxable gain.

You can invest in another residential property under Section 54 and avoid paying capital gains tax. Rather, you may park the funds in specified bonds (like NHAI or REC issued) under Section 54EC which gives another opportunity for tax saving provided such investment is made within six months from sale.

4.Claim Tax Benefits on Joint Ownership:

Co-owners of a jointly purchased property with a spouse or family member can claim individual tax deductions. In the case that both owners contribute to the home loan, they are entitled to claim deductions up to ₹2 lakh on interest under Section 24(b) and principal repayment up to ₹1.5 lakh under Section 80C. Such a strategy would effectively double the tax benefits, thus making joint ownership very attractive for couples or business partners.

5.Utilize Sections 80EE and 80EEA for New Home Buyers:

Section 80EE and 80EEA provide additional tax benefits to first-time homebuyers. Section 80EE allows an additional deduction of interest on the home loan up to ₹50,000, provided the loan amount is less than ₹35 lakh and the value of the property is under ₹50 lakh. For affordable housing, Section 80EEA provides an extended deduction of up to ₹1.5 lakh, again subject to specified conditions. The overall intent of these provisions is to encourage people to own homes and can considerably reduce one’s tax liability.

6.Use House Rent Allowance (HRA) Effectively:

If you live in a rented house and your salary package includes House Rent Allowance (HRA), then you can claim deduction under Section 10(13A). The amount of deduction would depend on the actual rent paid, salary, and city of residence. HRA can be claimed even if there is property ownership in another city. This is a great tactic, especially for salaried professionals to minimize taxable income without having multiple properties under their ownership.

Conclusion

Real estate investors and homeowners can save a lot in the financial year 2024-25 with the help of these six strategies tax-related real estate regulations may be complex but managing them is not. Whether it is the home loan benefits optimization, rental income tax reduction, or capital gains reinvestment, deductions are imperative to be known. Informed investors invest better. Tax savings maximization will contribute to financial stability enhancement and thus effective management of real estate investments.