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Income Tax Tips: Income is from property, know how Income Tax will be levied in this case..

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There are many ways to earn money by investing in today's time. Many people turn to real estate for investment. In real estate too, many people like residential property i.e. homes. There are generally two benefits of this type of investment (best option for investment). Firstly, it becomes a means of regular income in the form of rent, and secondly, the value of properties increases with time and thus a great return is obtained.

Earnings from home are not tax-free
According to the information, earnings from home are also not tax-free like other earnings. If you are earning from home, then your tax liability is being created. Whether your income is from rent or from selling the property after some time, tax liability is created in both types of cases. Just the method of tax liability is different in both types of cases. Today we are going to tell you about this in detail.

Tax on income from selling property
Now if we first talk about the income from selling after some time, then the profit from selling the house i.e. capital gain is taxed in two ways. If the house is sold after keeping it for 2 years or more, then it will be considered a long-term capital gain. 20 percent tax will be levied on the amount of capital gain after indexation benefit.

On the other hand, the profit from selling the house before 24 months will be considered as short-term capital gain. This profit will be added to the regular income of the person and tax will have to be paid according to the tax slab.

How can you save tax money?
Now if you are thinking of saving tax, then in some cases tax can also be saved here. Section 54 of the Income Tax Act gives relief from tax on selling the old house and buying another house from the income earned from it i.e. capital gain. This benefit is available only in the case of long-term capital gain. The Income Tax Act believes that in such cases, the seller's objective is not to earn money by selling the house, but to find a suitable home for himself.

Know what kind of property will get tax exemption?
It is clear in Section 54 of the Income Tax Act that capital gain should be used only to buy or build residential property. That is, tax exemption will not be available on buying commercial property. In the case of land, an exemption can be claimed on an amount equal to the capital gain tax on buying a plot and building a house.

Tax exemption will not be available only on buying land. From the financial year 2023-24, tax exemption can be availed by investing in residential property only on capital gains up to Rs 10 crore. Long-term capital gain tax will be levied on profits above this.

Know hereby when will you have to buy residential property.
Under Income Tax section 54, to avail tax exemption, a new house has to be purchased within 2 years from the date of transfer of the old property. Whereas, in the case of construction, the house should be built within three years. If you buy a new house even a year before selling the old property (property selling income), then you can avail of the exemption.

There is tax liability on rental income.
On the other hand, if your income is in the form of rent, then you will have to show it in your income tax return. It can be shown in income from other sources. This income will be added to your other income and after that, you will have to pay tax according to the tax slab that will be formed. Taxpayers do not show this type of income honestly, that is why a PAN Card has been made mandatory if the rent is more than a limit.

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