How to save on property tax?

Property tax is a mandatory charge collected by your municipal corporation or local government. The administration uses the funds collected from property owners to maintain local infrastructure such as roadways, transport systems, utility services, public run schools and hospitals, fire and police departments, etc.

While you should feel good about contributing to your city and neighbourhood, it is normal to feel the pinch of taxes over time. Even though you cannot eliminate it, here are some suggestions on how to reduce property tax.

All you need to do is familiarise yourself with the local laws and tax rules, and you’ll have the answer to how to save on property taxes.

Review your property tax card

The property tax card is available with your municipality or local governing body. This card has all the details of your home, including total built-up and carpet area, dimensions of different rooms, space free of FSI, etc. Ensure there are no discrepancies between what’s on paper and the actual asset, driving up your house property’s income tax. 

Don’t make unnecessary alterations or additions

This may be more relevant to those who have independent homes on a land parcel. Additional construction or structural changes to the property will also attract a higher tax. If you want to keep the tax liability low, avoid making new changes unless necessary.

Deduction on principal home loan 

This may not be a direct way to reduce your property tax in India, but you can use tax deductions offered under Section 80C towards the repayment of a home loan to offset your taxable income and bring down the overall cost of ownership. You can claim up to a maximum of Rs 1.5 lakh per annum, including all other deductions under Section 80C. To mention, property tax borne as well as paid by the owner of a let out property is allowed as a tax deduction to the owner while computing his income from such let out property

Deductions on interest repayment

If you have availed of a home loan for purchasing your property, interest charged on repayment can also be offset against your ownership cost. You can claim up to Rs 2 lakh per annum under Section 24(b). If the mortgage has been applied for jointly with other family members, all applicants can claim the said deduction, as long as the combined claim does not exceed the total interest paid in the financial year.

Other concessions

Other homestead property tax exemptions may be available to farmers, super senior citizens, members of the armed forces, or those living in specific affected areas.

If you have just bought a new property, the costs incurred on stamp duty payment and registration can also be offset as a one-time deduction (in the year of purchase) under Section 80C.

To sum it up

Reducing property taxes can take a lot of ingenuity; however, one aspect of owning a home where you can secure long-term savings is a home loan with IDFC FIRST Bank. Get tailor-made mortgages at affordable interest rates for a flexible tenure of your choice, with top-up loan options, if required.

Apply here for IDFC FIRST Bank’s home loan to get your dream house at a dream price!

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