Is Property Tax Deductible from Income Tax in India?

Wondering

can we claim property tax in ITR.

No, property tax paid on residential or commercial properties is not directly deductible from income tax in India under the Income Tax Act, of 1961. 

Can I Deduct Property Tax from Income Tax?

However, the property tax paid can indirectly affect your taxable income in certain cases:

• If you earn rental income from a property, the property tax paid can be claimed as a deduction against the rental income under Section 24 of the Income Tax Act. The deduction is available for the actual amount of property tax paid during the relevant financial year.

• When you sell a property, the property tax paid during the ownership period can be added to the cost of acquisition of the property. This can reduce the capital gains liable for tax under Section 48 of the Income Tax Act, thereby indirectly reducing the tax liability on the capital gains.

• Property tax paid is not directly deductible against the income from house property under Section 24, which allows deductions for interest on housing loans and standard deductions.

• However, it's considered while calculating the annual value of the property, which is used to determine the taxable income from house property.

• If you own a property used for business purposes, such as rental income from commercial properties or properties used for business operations, the property tax paid can be claimed as a deduction as a business expense under the Income Tax Act.

Your query about is property tax paid deductible in income tax should be solved.

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Are you wondering to know

about

property tax deduction in income tax?

Let me help you. Your property tax is not directly deducted from income tax. 

• The interest you pay on a home loan is eligible for deduction. It is given under Section 24(b) of the Income Tax Act. There is a maximum limit of Rs 2 lakh for your self-occupied property. For other properties, there is no maximum limit on the deduction.

• The repayment of the principal amount of the home loan is eligible for deduction. It is given under Section 80C of the Income Tax Act. It is subject to a maximum limit of Rs 1.5 lakh.

• Your expenses on stamp duty and registration charges can also be claimed as a deduction under Section 80C in the year of purchase of your property.

This is all about the

deduction of property tax in income tax

.

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Hey there Francis,

Property tax is something every property owner is liable to pay under Section 24 which is titled “Deduction From Income from House Property”. So, like you, I was in a similar dilemma is property tax deductible from income tax in India or not. It was not long ago when I came to understand that yes, property tax income deduction does take place. All we need to understand is the different scenarios in which we property owners need to pay income tax on our property under Section 24. So let me tell you what those cases are.

• When a property is rented, all of the rent that is collected on the rented property is considered the income of the property owner.

• If an owner has more than one property, then the Net Annual Value of all those properties will be considered as the income of the owner. Only the property in which the owner is living will be exempted from it.

• If the property owner has only one property or house in which he/she is residing, then the income of that owner from the property will be considered as NIL.

The deductions under Property Income tax are done under two categories;

• Standard Deduction:

  Standard deductions are the deductions made when income is collected on a rented property. If the owner of the house is also a taxpayer and collects income from the rented house as 30% of the Net Annual Value of the house, then they can be exempted from paying the income tax. Although this is not applicable if the owners of the house are residing in the same house.

• Interest on Loan:

  If the owner of the house has taken a home loan on the house, he/she can be exempted from paying the interest on the principal amount. There are three clauses under this category as;

• If the house is self-occupied, the owner can claim exemptions up to Rs. 2 lakhs on the home loan.

• The owners of a house can also claim exemptions for an under construction house. They can claim it on the interest paid on the principal amount and also be eligible for 5 equal instalment deductions.

• But in case the owners of the house are getting their house renovated, they cannot claim any exemption until the renovation is complete. 

I hope now you have the answer to the question “Is property tax deductible from income tax in India or not”.