Property Tax

  • How do I pay property tax?

    Most municipalities allow for the payment of property tax online. Past payments can also be checked here. The government portals also calculate the property tax liability for you.

  • What are long term and short term capital assets?

    A capital asset held for not more than 36 months or less is a short-term capital asset. An asset that is held for more than 36 months is a long-term capital asset. For example, a house property held for more than 3 years is termed as a long-term capital asset.

  • Do I have to pay property tax for a vacant house property other than self-occupied property?

    Yes. Such a property is ‘deemed to be let-out’ and tax is charged on its estimated annual rent value. This property should not be the one on which the owner avails self-occupied property benefit.

  • What is Property Tax?

    Property tax is a type of house tax levied annually, which is paid by a landowner to the local government or the municipal corporation of his area.

  • How is capital gain calculated?

    Capital Gains is calculated by deducting from full value of consideration received or accumulated as a result of transfer the following amount: (i) Expenditure incurred wholly and exclusively in connection with such transfer (e.g. brokerage or commission for securing a purchaser, registration fee, travelling expenses in connection with transfer); and (ii) the cost of acquisition of the capital asset and cost of improvement thereto. However, in case of transfer of a long term capital asset after deducting the expenditure incurred wholly and exclusively in connection with such transfer, the ‘indexed cost of acquisition’ and ‘indexed cost of improvement’ has to be deducted.

  • My property is in my wife’s name but I pay the EMI of the loan taken for the property, what is the tax benefit that I can claim?

    You cannot claim the tax benefits.

  • What forms of long term or short term capital gains exempted from taxation?

    (i) Exemption of Capital Gains arising on transfer of assets in cases of shifting of Industrial Undertaking from Urban Area to Rural Area Capital asset transferred should be any land, building plant or machinery. New asset in the rural area should be purchased within 1 year before or 3 years after the date of transfer. Provisions of deposit in Capital Gains Account Scheme, 1988 and consequence of transfer of the new asset within 3 years will be the same as in S. 54. (ii) Exemption of Capital Gains on transfer of Assets in cases of shifting of Industrial Undertaking from Urban Area to any Special Economic Zone Section 54H simply extends time for investment to qualify for exemption in cases where capital asset is compulsorily acquired in any previous year but payment is made not on the date of compulsorily acquisition of the asset. In such cases time limit for investment will be reckoned form the date of receipt of the amount by the assessee.

  • How is the Annual Value for let-out property calculated? What are the deductions from this annual value allowed?

    Gross Annual Value of a let-out property is equal to the maximum of the following- 1. The sum for which the property might reasonably be expected to let from year to year. 2. Actual rent received or receivable by the owner of the let-out property. 3. Municipal valuation of the property. Net Annual Value is then calculated by deducting municipal taxes paid during the year from the Gross Annual Value. Deductions are provided under Section 24 of the Income Tax Act, 1961. Deductions provided under the section are exhaustive. These are deducted from the Net Annual Value and remaining amount is taxed- 1.A sum equal to 30% of the net annual value as computed above. 2.Interest on money borrowed for acquisition/construction/ repair/renovation of property is deductible on accrual basis. Interest paid during the pre-construction/acquisition period will be allowed in five successive financial years starting with the financial year in which construction/acquisition is completed. This deduction is also available in respect of a self-occupied property and can be claimed up to maximum of Rs.30,000/-. The Finance Act, 2001 had provided that with effect from the year 2002-03 the amount of deduction available under this clause would be available up to Rs.1,50,000/- in case the property is acquired or constructed with capital borrowed on or after 1.4.99 and such acquisition or construction is completed before 1.4.2003. The Finance Act 2002 has further removed the requirement of acquisition/ construction being completed before 1.4.2003 and has simply provided that the acquisition/construction of the property must be completed within three years from the end of the financial year in which the capital was borrowed.

  • I have a house property in Pune, but it is locked up, no one is staying there and thus no income generated through that house. Do I need to pay the tax?

    Yes, you’ll need to pay the tax.

  • Please write the formula for calculating the LCGT.

    Long term capital gain tax is 20% of the gain you earned from the property. If the property was held for more than three years at the time of transfer, then the gains are considered as long-term capital gains (LTCG). It is taxed at 20% with indexation. To calculate LTCG from the property, the seller has to calculate the indexed cost of acquisition.

  • How is house property tax calculated?

    House property tax is calculated on the basis of ‘Annual Value’ of the property. Annual value is different for let-out property and self-occupied property. It differs from state to state and location to location.

  • If I sell my flat, within what time frame should I buy a new one to avoid paying tax. Does the full amount need to be invested in a new flat?

    Within 3 years of selling of property you need to invest again in real estate. This could be ready to move or you can construct within 2 years of selling.

  • What is the rebate given on Income Tax for repaying of Principal amount for a home loan taken for buying a ready to move in property?

    You can get 1.5 lakhs of rebate.

  • What is the service tax % in India on property? Please explain all components?

    Service Tax in India is 14.5%. But in some properties, certain components are there where service tax are 3.6% where govt. offers rebate. Base Price – 3.6% PLC (Premium Location Charges) 14.5% Car Parking – 3.6% Club Membership Fees  14.5% External Electrification Charges  3.6% Fire Fighting – 3.6% Power Backup  3.6% Administration Charges 14.5% Transfer Charges  14.5%

  • When is long term capital gain tax applicable?

    Long Term Capital Gain Tax is applicable when you sell any property and you earn certain gain from that, then you have to buy another property from that profit within 3 years of selling which should be ready to move in or can buy land where you can construct house within 3 years. Then you can save capital gain tax. If fail to buy the same then capital gain tax of 20 % will be applicable on the profit.

  • What is a capital asset?

    Capital asset means property of any kind held by a taxpayer, whether or not connected with his business or profession. Land, building, house property, vehicles, patents, trademarks, leasehold rights are some examples of capital assets.

  • Income from what all properties are exempted from tax?

    1. Income from an agricultural land. 2. Annual value of any one palace of an ex-ruler. 3. Property income of a local authority, university/ educational institution, approved scientific research association, political party. 4. Property used for own business or profession. 5. House property held under trust for charitable/religious purposes.

  • My house property does not generate any income. Am I still liable to pay house property tax with respect to that property?

    Yes, even though you are not liable to pay tax on income from property you are still liable to pay house property tax for that property. Basis for taxation under the head house property is not the actual income generated by a property but its potential to generate income. Hence, it’s irrelevant whether that property generates any actual income or not. Suppose you own two properties and both of them are occupied by you and your family, then for the purpose of income tax only one of them will be exempted from taxation and fair rent value of the other will be considered your income from that property.

  • Who is a ‘deemed owner’ for the purpose of payment of property tax?

    Deemed owner is an owner by implication, he may not be the person under whose name property is registered. Some instances in which a person who is not the owner of the property is considered to be the owner for the purpose of tax levy are- 1) When an individual transfers any house property to his/her spouse or minor child without any adequate consideration then such an individual is deemed to be the owner of that house property. In case of spouse such transfer should not be under any agreement for separation. 2) When two or more persons own a house property in which is not legally divisible then the holder of such impartible property would be deemed to be the owner of such property.. For example, where a Hindu Undivided Family (HUF) jointly holds property on behalf of all its members, it will be treated as the owner, though legally, the property will be in the names of individual members of the family. 3) A person who has acquired any rights in a house property by way of lease for not less than 12 years is deemed to be the owner of that property. 4) A person, being the transferee (buyer), who under a contract for transfer of a house property takes possession of the property and has performed or willing to perform his part of contract attracts the provisions of section 53A of the Transfer of Property Act, 1882 and is deemed to be the owner of the property. It is to be noted that in this case the transferee has no title in the property, he only has the possession of the property. 5) A person who is a member of cooperative society, company or other association of persons to whom a building has been allotted under a house building scheme of the society, company or association, as the case maybe, will be treated as deemed owner of that property.

  • Who pays house/property tax?

    Owner of the property pays this tax. Person in possession of the property might or might not be the owner of the property. Owner is usually the registered owner of the property. Owner here also includes a ‘deemed owner.’

  • What is capital gain?

    Capital gain means profit from transfer of a capital asset.

  • Is there any service tax on the under construction property?

    Service Tax is levied on under construction property @3.6% if property value is less than 1cr & property area is less than 2000 sq feet. However, the service tax is 4.3% if property value is more than 1cr and property area is more than 2000 sq feet.

  • What income tax benefits that one can get if has taken a home loan to buy a property in which he is now staying?

    The customer can get the following tax benefirs: On Interest part: upto 2 lakhs On principal part: upto 1.5 lakhs

  • Can a property other than a property used for residential purpose by the owner and his family, be called a self-occupied property?

    A property owned by a person and occupied by him and his family for residence is considered to be a self-occupied property. However, if with respect to any property following conditions are satisfied then it is treated as a self-occupied property- 1. Property is owned by the taxpayer. 2. Such property is not let out to any person and generates no benefit to the taxpayer. 3. Taxpayer cannot occupy or reside in such property owing to his employment, profession or business carried on at some other place and he has to reside at that other place in a property which does not belong to him.

  • Do we need to pay service tax on prepayment of home loans?

    We don’t need to pay the service tax.

  • How much is long term capital gain tax?

    Long term capital gain tax is 20 % of the gain you earned from the property.

  • What is the service tax on PLC and why?

    Service tax on PLC is 14.5% as it is considered as luxury.

  • Is it necessary to take a permission from the Income Tax department if I am interested in purchasing an immovable property?

    It’s not necessary to take a permission from the Income Tax Department. You can start your search anytime anywhere once you’re ready. I’ll be happy to assist you in locating the best deal based on your requirements.

  • What forms of long term capital gains exempted from taxation?

    Following – (i)Capital Gains arising from transfer of residential house, For instance: When a taxpayer has within a period of one year before or two years after the date of transfer purchased residential house in India or within a period of 3 years from the date of transfer constructed a residential house in India. The amount of exemption will be to the extent of the cost of new residential house purchased or constructed. And, if the amount of capital gains could not be utilized for acquisition or construction of the new house before the date of furnishing the return, the such amount should be deposited in Capital Gains Account Scheme, 1988 with any specified bank authorized by Central Government for availing exemption. Also, if the new house is transferred within a period of 3 years of its purchase or construction, the exemption given earlier will be withdrawn. (ii) Capital Gains arising from the transfer of Agricultural Land: If the taxpayer has purchased within a period of 2 years from the date of transfer any other agricultural land for agricultural purposes then also it is exempted. (iii) Capital Gains on Compulsory acquisition of Land or building used as Industrial Undertaking by the taxpayer: If the taxpayer within a period of 3 years purchased any land or building or constructed any building for shifting or re – establishing the Industrial Undertaking. (iv) Exemption on investment of Long Term Capital Gains in Specified Long Term Assets i.e. in certain Bonds: If investment is made within 6 months from the date of transfer. Maximum for investment which qualifies exemption is 50 lakh rupees. Here deposit in Capital Gains Account Scheme, 1988 does not apply but consequence of transfer of the Bond within 3 years or taking loan against such bond within 3 years is the same i.e. exemption allowed will be withdrawn. (v) Exemption on investment of Long Term Capital Gains for purchase or construction of residential house in India: This exemption is available to individuals and HUFs. The residential house should have been purchased 1 year before or 2 years after or constructed within 3 years. Provisions of deposit in Capital Gains Account Scheme, 1988 and consequence of transfer of the new acquired/constructed residential house within 3 years will be the same as (i) sub clause.

  • How can I find out the Municipal Valuation of my property?

    Municipal Valuation of your property will be published as rates for different areas by the municipal authority in that area. Property tax to be paid to the local authorities will be calculated based on this valuation. Today, several municipalities provide online facilities for calculation and payment of property tax.

  • What is the Annual Value of self-occupied property? What deductions are allowed in case of self-occupied property?

    Annual Value of self-occupied property is zero. Owner of self-occupied entitled to get deductions in the form of interest on loan taken for the construction or purchase of the property. The interest payable is subject to a max of Rs. 1,50,000 (loan taken on or after April 1,1999) and Rs. 30,000 (loan taken before April 1, 1999).

  • Is there is any property tax on vacant land?

    Yes, there is a property tax on vacant lands which are not used exclusively for agricultural purposes.

  • A part of my property is self-occupied and rest is let-out. How will my income from this property be computed?

    Part of the property which is self-occupied will be treated as an independent self-occupied property and part which is let-out will be treated as an independent let-out property and income chargeable to tax will be calculated for both parts independently.

  • Who will pay the property tax when title of property is in dispute?

    When there is a dispute between two persons with regard to the title of the property, till the dispute is decided by the court, the assessing officer has the power to decide the owner who will be the liable to pay the tax till the title is in dispute. If his decision is against what the court later decides, then the person who paid the tax can ask for refund from the other person.

  • How would a joint holding of property affect tax liability?

    If the property is jointly held, then the income and deductions can be availed by each co-owner based on the respective shareholding in proportion mentioned in the purchase deed or agreement.

  • What is service tax on Ready to move in resale property?

    There is no service tax on resale property.

  • When is short term capital gain tax applicable?

    Short term capital gain tax is levied when you sell any property and you earn certain gain, from the same gain you have to buy property within the same financial year. If you are able to buy ready to move in property, then tax is saved. If fail to buy or build a property, then have to pay tax which be added to your taxable income on the respective financial year.

  • Is there a property tax for the mortgage property.

    Yes, there will be property tax.

  • What is property Tax ? Is it vary from city to city ?

    Property tax is a type of house tax levied annually, which is paid by a landowner to the local government or the municipal corporation of his area. It varies from locality to locality and city to city.

  • My property was self-occupied for a part of the year and was let-out for the remaining part, how will my income from this property be computed?

    Your property will be treated as let-out for the whole year and the income chargeable to tax will be calculated accordingly.

  • What all does the term property include for the purpose of income tax?

    The term property for the purpose of Income Tax Act, 1961 is limited to any building including land forming an integral part of that building, i.e. necessary for the use of the building and not used for any other purpose which may generate taxable income, for example a paid parking lot would not be considered part of a building and would be treated as a separate property. Tax on rental income from a vacant plot is charged under the head income of other sources. Income from property used for business and profession will be taxed under the head income from profits and gains from business or profession.

  • What is the difference between property tax and income tax?

    Property tax levied on the annual property value and is based on the number of properties the owner has. Income tax levied directly on personal income.

  • What is income tax benefits that one gets when he is paying Pre-Emi for a under construction property?

    Customer cannot get any tax benefits.

  • If I am having two residential properties in two different cities, what are the taxation rules for both of them? Both are income generating.

    Its vary from locality to locality and city to city.

  • Are the capital gains from the transfer of an inherited property or a property received as gift chargeable to tax?

    Yes, transfer of a property that is inherited or accepted as a gift will also attract capital gain/loss provisions even though you haven’t spent any money to acquire it. In such a case, capital gains will be calculated on the basis of the cost to the previous owner, indexed to the year of purchase.

  • What is TDS on property above 50 Lacs?

    1% is the TDS above 50 lacs.

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