Investing in residential plots in India, particularly in Hubli-Dharwad, North Karnataka, has become a lucrative option for individuals aiming to build wealth through real estate investments. Developers like Midmac are actively promoting premium land developments, making it easier for investors to secure prime plots in Karnataka. Beyond property appreciation, it’s equally important to understand the tax benefits of investing in residential plots in India.
1. Capital Gains Tax Benefits
When you sell a plot after holding it for more than two years, it qualifies for long-term capital gains (LTCG) tax at 20% with indexation benefits. This reduces tax liability compared to short-term gains. Additionally, reinvesting proceeds in another property or 54EC bonds can help you claim further tax exemptions.
2. Tax Exemptions Under Section 54F
Under Section 54F of the Income Tax Act, if you sell a plot and use the proceeds to construct a house within three years, you can claim tax exemptions on capital gains. This makes plot investment a smart choice for those planning to build custom homes in Hubli-Dharwad or across Karnataka.
3. No Property Tax on Vacant Land
Unlike built-up properties that attract higher property tax, vacant residential plots usually carry minimal municipal taxes. In cities like Hubli-Dharwad, India, taxes on undeveloped land are relatively low, making them a cost-effective investment option.
4. Loan Tax Benefits
While plot loans do not offer direct tax deductions, you can claim tax benefits if you convert the loan into a home construction loan. Under Section 24, interest payments are deductible, and under Section 80C, you can claim deductions on principal repayments once the house is built.
5. Agricultural Land Tax Exemptions
If the purchased land is classified as agricultural land in North Karnataka, it may qualify for additional tax exemptions on capital gains. However, always check local land-use regulations before investing.
Conclusion
Investing in residential plots in Hubli-Dharwad and North Karnataka with trusted developers like Midmac offers not just long-term appreciation but also strategic tax benefits. Whether you plan to construct a home or hold the land for future appreciation, understanding these tax incentives can help you maximize returns from your real estate investment in Karnataka.
