What are the Tax Benefit of Commercial Property?

The commercial property loan tax benefit India are as follows. Commercial properties in India offer several tax benefits to their owners. These benefits can vary depending on the type of property, its usage, and the applicable tax laws. If you have taken a loan to purchase or construct a commercial property, you can claim a deduction on the interest paid on the loan under Section 24(b) of the Income Tax Act.

What is the Tax Exemption on Commercial Property Loan?

The maximum deduction allowed is Rs 2 lakh per annum for self-occupied properties and the entire interest amount for let-out or deemed let-out properties.

Commercial property owners can claim depreciation on the property's value as per the Income Tax Act. Depreciation is allowed as a deduction against the rental income earned from the property. The rate of depreciation depends on the type of property and the assets within it.

• Property owners can claim a deduction for the property tax paid during the financial year under Section 24(a) of the Income Tax Act. This deduction is available for both residential and commercial properties.

• Expenses incurred on repairs and maintenance of commercial properties are eligible for tax deduction under Section 30 of the Income Tax Act. However, capital expenses such as renovation or improvement costs are not deductible but can be capitalized and claimed as depreciation over time.

• Rental income earned from commercial properties is subject to taxation under the head 'Income from House Property' in the Income Tax Act. Owners can claim deductions for municipal taxes paid and a standard deduction of 30% of the net annual value (rental income minus property tax).

• While the principal repayment of a loan taken for purchasing or constructing a commercial property does not offer any direct tax deduction, it is eligible for deductions under Section 80C of the Income Tax Act within the overall limit of ₹1.5 lahks per annum.

If you sell a commercial property and make a profit, you may be liable to pay capital gains tax. However, you can avail of tax benefits by reinvesting the capital gains in specified bonds or by purchasing another property under Sections 54 and 54F of the Income Tax Act, respectively.

These are the commercial property loan tax benefit India.

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There are so many taxes levied on almost everything, isn’t it? Trust me, after getting a commercial property, I was barely able to save money until my friend spoke of the commercial property loan tax benefit. I did not know how to claim a deduction and also how much it should be. But since I know now, let me help you out with it.

What income tax benefit on commercial property loan can be enjoyed by an individual?

When a person buys a commercial property on a loan, he/she can enjoy or avail of some tax benefits, let me share how here-

Under the standard deduction, a person can enjoy tax benefits on commercial property. The Annual Value is the amount of rent the individual receives on the rental property. As per the Income Tax rules, the owner can claim a standard deduction of 30% of the annual value for some acts like

• Repairs

• Insurance

• Electricity and water supply

• Maintenance and more

This is regardless of whether you incur the expense or not

As per Section 24 of the Income Tax Act 1961, commercial property owners who have availed of a loan to buy, construct, or do some other activities on the property can avail of a tax deduction of Rs 2 lakh on the interest compound repaid via EMIs. Also, note that processing fees and repayment fees can also be included in the interest compound.

Do remember that no deduction is allowed under Section 80C of the Income Tax Act of 1961 for the repayment of the principal amount of a commercial property loan. So this is all I can say about the tax benefit of commercial property. If you have any doubts, please ask an expert about it. It can save you a lot of time and a good amount of money. 

After all, if you can get commercial property loan tax benefit, why not claim it?