Best Ways To Save On Property Tax
Once you have invested in a property, you should be aware that there are tax issues involved. If you just thinking of buying property then it is important to stay informed about this aspect. Given below are some bits on information about the tax involved and how one can make some savings on the tax using deductions and exemptions.
First things first: tax on property calculation has been rendered simpler after the advent of GST. All the taxes on property such as service tax and VAT have now come under a single unified system. The money spent to buy a property is now classified as under two heads: the amount paid to the buyer for the house and the other amount paid to the government as legal and other statutory costs. The distribution ratio between these two is usually like this: 80-85% versus 15-20%.
Another point to be noted is that the taxes for under-construction apartments/houses and already completed apartment are different.
Under Construction Property
If you are looking out for apartments in Bangalore that are under construction, the statutory and legal costs amount to about 20%. This is dependent on the state where the property is located. These charges include stamp duty, GST and registration charges. Karnataka stamp duty charges are about 5.6%. Registration charges amount to 1% of the total cost of the property and has to be paid up at the sub-registrar’s office.
As far as GST is concerned, it is about 12% of the cost of the property. It is expected that this will be reduced to about 8% soon. TDS or tax deducted at source is 1% for those properties that cost less than 50 lakhs. The buyer pays an amount with TDS reduced from the total to the seller. This amount has to be then paid to the government as tax either through a bank or through online means.
Ready made Properties
In case of ready-to-move-in apartments, they are exempted from GST payment. If you want to buy the best luxury flats in Bangalore, it is better to look out for completed projects so that you can save on GST. Those that buy ready made properties need to spend about 7-8% of the total cost of the property as stamp duty and registration charges.
The government’s statutory charges are covered in this amount that is paid. Therefore, buying luxury apartments in Bangalore is a good proposition for home buyers. This is because they can move in immediately and not spend any more money on paying rent. They can also save on the GST which is applicable only for homes under construction.