Here are some of the tax advantages that Income Tax laws provide to the housing sector:

• You, as a tax payer, get a deduction towards interest up to Rs. 2 Lacs on loan for a self-occupied property per FY.

• You get to deduct even the principal (up to Rs 1.5 Lac) under Section 80(C) for a self-occupied property.

• If you have a second house and if it is a let-out property, you can deduct the full interest (NO LIMIT!) from your rental income. You also get to claim deduction towards municipal taxes paid during the relevant FY and a flat deduction of 30% of the annual value towards repairs.

• The loss, if any, from the house property after considering the aforesaid deductions can be offset against income in any other head of the current FY. In other business you can deduct interest against income made from that business and not against your salary or income from capital gains. In short-term trading of shares, any losses made can’t be used to offset your salary. But for the loss from house property, such is not the case.

• The loss, if any, which cannot be set off against the current FY’s income can be carried forward to subsequent FYs subject to a maximum of eight FY’s for set off against the income from house property of subsequent FYs.

• Capital gains that you make when selling the house can be exempted from tax by buying another house if they are long term capital gains.

• If you make capital gains by selling other capital assets like shares, government bonds and/or gold, you can buy a residential property with the sale proceeds and need not pay the tax on your capital gains if they are long term capital gains.

• Any property which is given out on rent for a minimum period of 300 days in the previous year is not considered as an asset. Such a property i.e. let out for 300 or more days, is excluded from net wealth and not subject to wealth tax as per the prescribed provisions of the wealth tax law.