If you are earning rental income from any of your properties, then this article is very useful for you. In this article, we have suggested tips to save tax on rental income. You must be earning rental income from various sources, be it house, shop etc. This income gets added up in your total taxable income on which, further tax to be paid is calculated.
Now, in order to save total tax, you need to reduce the total taxable income. You can do this by saving tax on rental income part by following the below given tips.
You can save tax on rental income by following the given tips:-
- Maintenance charges: One of the easiest ways to save tax is to exclude maintenance charges from the rent received. Some people include maintenance charges in the rent, which increases the whole rent amount; in a way, it grows tax on the rent income. For example, if you are charging a rent of Rs 30,000 and have included Rs 5000 as maintenance charges, you will pay tax on the total Rs 30,000. However, you can save tax on Rs 5000 by excluding such costs from maintenance charges. For this, you only have to write one line in a rent agreement stating- Tenant can pay maintenance directly to society association.
- Joint property: If you decide to purchase a property jointly with a family member you trust (husband/wife/parents), you can save on tax on rental income. In such a case, the Rental Income is divided into two, and you can save tax on rental income proportioned to the other family member.
- Municipal taxes: You can deduct municipal taxes like sewage tax, property tax from rental income tax. But remember that all these municipal taxes have to be paid by the owner of a property, not a tenant. Such payments will reduce your rental income and thus reduce your tax liability.
- Semi-furnished or fully furnished property: If you are letting your property with services like Wifi connection, DTH connection, Pipeline connection, etc., you can ask the tenant to pay such charges separately and not include them in rent. This will lower down the rental income, and you will have to pay lower tax on it.
So, If you are earning more rental income than pre-decided by the Income Tax department, then there are ways to save tax. The Income Tax of India levies tax on rental income under section 24. You can save tax on rental income by making standard deductions, owning property jointly, and much more.
If you are looking for personalized solution to save tax on your income, you can contact us at +91 9460825477
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