Income tax strategies for real estate investors: Maximising deductions and minimising liabilities
Tax planning is fundamental to building wealth through real estate. This could boost housing demand and drive up prices in a specific area.
Effective tax management involves considering deductible costs. Gunjan Goel, Managing Director at Goel Ganga Developments, stated, "By tracking all eligible charges, investors can reduce taxable income and maximize accrual." He emphasised that every expense, including mortgage interest, property tax, insurance, and maintenance, contributes to achieving full tax deductions for investors.
Besides utilising tax-saving methods, depreciation emerges as a potent tool for real estate investors. Aman Gupta, Director at RPS Group, highlights this crucial strategy: "Depreciation allows you to leverage your property's value to reduce taxable income annually, offering a genuine tax shield for organizations." By employing accelerated depreciation methods and strategic asset selection and timing, investors retain a substantial portion of their assets while benefiting from tax incentives.
It's an appeal to investors who want to reinvest profits and defer tax payments. Ashish Aggarwal, Director at Acube Ventures, explains, "By swapping one investment property for another of equal or greater value, you can delay paying capital gains tax and use saved money for reinvestment." This tool enables investors to expand their portfolios and sustain growth while minimizing tax burdens.
Agam Gupta, Executive Director at Share India Fincap Pvt. Ltd., noted, "Each business structure—be it sole proprietorship, partnership, or limited liability company—has distinct tax implications." Investors can strategically select their preferred entity based on factors like income levels, asset protection needs, and long-term
. Read more on livemint.com
