Source: Times Property (https://bit.ly/3TL1Mqh)

Many personal finance experts regard real estate as a reliable vehicle for efficient tax planning. Moreover, it is also considered a good instrument for wealth creation, albeit if you know how to structure your property investments efficiently. Here’s all you need to know.

Loan Relief
Home loans offer the most notable tax benefits for real estate investors in India. Under the Income Tax Act, borrowers can claim deductions on the interest paid and the principal repayment of home loans. These provisions are available under sections like Section 80C and Section 24(b), which can significantly reduce the tax burden, making homeownership more financially viable. “Under Section 80C, homeowners can claim up to Rs 1.5 lakh per year on their home loan’s principal repayment, offering significant tax relief. For interest payments, Section 24(b) allows deductions up to Rs two lakh annually for self-occupied properties. First-time homebuyers enjoy additional benefits through Section 80EEA, which provides an extra Rs 1.5 lakh interest deduction for affordable homes valued at Rs 45 lakh or less, and Section 80EE offers Rs 50,000 in additional deductions for loans up to Rs 35 lakh. For example, purchasing an affordable home with a Rs 40 lakh loan could save you Rs 3.5 lakh per year in interest deductions by combining the Rs two lakh under Section 24(b) and Rs 1.5 lakh under Section 80EEA,”

Strategic gains
“The secret is intelligent layering. Beyond the principal repayment of the home loan, Section 80C provides deductions for other instruments, including PPF, EPF, and tax-saving FDs. Therefore, when buying property, one can structure the loan tenure and amount so that the principal repayment is kept within the Rs 1.5 lakh limit every year, allowing for other 80C instruments

Joint advantage
Opting for joint ownership of property can be a strategic move to maximise tax benefits. When two or more co-owners contribute to the purchase and repayment of a home loan, each is eligible to claim deductions individually under sections like 80C and 24(b) of the Income Tax Act.

Incentive edge
Under-construction and affordable housing projects in India are often backed by a range of government-led tax incentives and policy benefits. These initiatives are designed to promote housing accessibility while also offering financial relief to property investors.