May 06, 2024

Tax benefits for women while investing in real estate

Gone are the days when fixed deposits and gold were the only instruments of investment preferred by women. A recent market analysis reveals that nearly 68% of Indian women today are choosing real estate as a reliable and profitable avenue of investment over FDs and gold. While the risk appetite has surely increased, a clutch of tax benefits offered by the government also make this route more lucrative for women.

Here are some of the tax reliefs women enjoy:

# On home loan interest: Women can avail tax deduction on home loan interest payments under Section 24(b) of the Income Tax Act, going up to Rs 2 lakh per year. This can lead to substantial savings over the years.

# On home loan principal: Women investing in real estate can also claim tax cuts on the repayment of the principal amount of their home loan. This benefit can be claimed under Section 80C of the Income Tax Act, and is capped at Rs 1.5 lakh per financial year. Taxable income is significantly reduced, whittling down tax obligation.

# Benefits of joint ownership: When women opt for joint ownership of a property with a spouse or any other family member, both the parties can claim tax deduction benefits on both interest and principal components of their home loan.

# On capital gains: Selling any real estate property entails substantial capital gains tax. But women enjoy considerable slack in this regard. Under Section 54 of the Income Tax Act, a woman can claim total exemption from capital gains tax if she reinvests the proceeds from the sale of one residential property into another one within two years or builds a new property within three years.

# Lower stamp duty: In some states, women can enjoy a discounted rate of stamp duty for property registration if the property is in the name of a woman or co-owned by her. This rebate eases the burden of initial investment.

# Bonanza for first-timers: A few state governments offer supplementary benefits for women purchasing a residential property for the first time in the shape of extra rebate on stamp duty and registration fees, thus smoothening the entry process for them.

# Depreciation benefit: Women who live in rental properties can avail of tax deduction due to wear and tear by way of depreciation. Even when the property is not generating positive cash flow, it can provide a tax rebate.

In today’s scenario, women have emerged as a prominent segment of real estate buyer across the country, and are influencing market trends as well, more so in metros and large cities. So much so, that developers are heeding their preferences with utmost alacrity and planning their fresh portfolio of products as per the preferences of women buyers.

Several government schemes are also contributing towards women’s home ownership. A case in point is the Pradhan Mantri Awas Yojana (PMAY), which ordains that to qualify for the scheme, homes must be registered in the name of a woman or by making a woman joint owner. This has also provided a shot in the arm for women from the poorer sections of society. So, at both ends of the property-buying spectrum, women are playing an increasingly active role.

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