Things to Know About Real Estate Tax While Buying Apartments

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 When purchasing a property, especially in a bustling city like Bangalore, understanding real estate tax is crucial. This knowledge not only helps you make informed decisions but also ensures that you're financially prepared for your investment. If you're considering buying apartments in Electronic City, here are some essential things to know about real estate taxes.

1. Stamp Duty and Registration Charges

Stamp duty is a significant tax levied by the state government on property transactions. It varies across states but typically ranges between 5-7% of the property's market value. Registration charges, usually around 1%, are paid to record the property's sale deed officially. These charges must be paid upfront and are essential for the legal transfer of ownership.

2. Property Tax

Once you become a property owner, you'll be liable to pay property tax annually. The tax amount depends on the property's location, size, and usage (residential or commercial). In Electronic City, where the infrastructure is rapidly developing, property taxes might be slightly higher compared to other areas, reflecting the high demand and enhanced amenities.

3. Capital Gains Tax

If you plan to sell your apartment in the future, understanding capital gains tax is essential. This tax is levied on the profit made from selling the property. Long-term capital gains tax applies if the property is sold after two years, while short-term capital gains tax applies if sold before that. The tax rates differ, with long-term gains often enjoying indexation benefits, reducing your tax liability.

4. Tax Benefits on Home Loan

One of the most significant advantages of buying a property is the tax benefits on home loans. Under Section 80C of the Income Tax Act, you can claim a deduction of up to ₹1.5 lakh on the principal repayment. Additionally, under Section 24(b), you can claim a deduction of up to ₹2 lakh on the interest paid on your home loan, significantly reducing your tax burden.

5. GST on Under-Construction Property

If you're buying an under-construction apartment, the Goods and Services Tax (GST) is applicable. As of now, the GST rate is 5% for residential properties. However, GST is not applicable for ready-to-move-in properties, making it an important consideration while deciding whether to buy an under-construction or completed apartment.

6. TDS on Property Purchase

If you're purchasing a property worth more than ₹50 lakh, you need to deduct 1% TDS (Tax Deducted at Source) on the property's value while making the payment. This TDS amount should be deposited with the government, and the seller will get credit for this TDS when filing their income tax return.

7. Wealth Tax

While wealth tax has been abolished in India since 2016, it's still worth knowing that if you own multiple properties, any income generated from them is taxable under the 'Income from House Property' head. This applies if you plan to buy multiple apartments in Electronic City as investments.

Conclusion

Understanding these real estate taxes will help you navigate the complexities of property investment with confidence. If you're looking to buy apartments in Electronic City, consider Mahendra Aarya. Our luxury apartments offer not only a prime location but also a range of modern amenities that make your investment worthwhile. Explore Mahendra Aarya today and secure your dream home in one of Bangalore's most sought-after areas.

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