Investing in residential plots in Hubli-Dharwad, North Karnataka, has become a lucrative option for individuals looking to build wealth through land investment. Developers like Midmac are actively promoting premium land for sale, making it easier for investors to secure prime locations. While many focus on property appreciation in Hubli-Dharwad, it’s essential to understand the tax benefits on plot investment.
1. Capital Gains Tax Benefits for Plots in Hubli
When you sell your residential land for sale in Hubli after holding it for more than two years, it qualifies for long-term capital gains (LTCG) tax, which is taxed at 20% with indexation benefits. This significantly reduces the tax liability compared to short-term gains. Additionally, reinvesting the proceeds into another property or 54EC bonds can provide tax exemptions.
2. Tax Exemptions Under Section 54F on Land Sale
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 a tax exemption on land sale in India. This makes land investment in North Karnataka a strategic choice for those planning to build custom homes.
3. Property Tax on Vacant Land in Hubli-Dharwad
Unlike built properties that attract higher property tax, vacant plots in Hubli-Dharwad usually have a minimal tax liability. The municipal taxes on undeveloped property in Hubli are relatively low, making them a cost-effective investment.
4. Tax Benefits on Plot and Construction Loans
While plot loans do not offer direct tax benefits, if you take a construction loan after purchasing a residential plot in Hubli, you can claim deductions on interest payments (Section 24) and principal repayments (Section 80C) once the house is built.
5. Agricultural Land Tax Exemptions
If the land for sale is classified as agricultural in certain zones of North Karnataka, it might qualify for additional tax exemptions on gains. However, it’s important to check the local land-use regulations before purchasing.
Conclusion:
Investing in residential plots in Hubli-Dharwad 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 value appreciation, understanding these tax incentives can help maximize your returns from Hubli-Dharwad real estate. Consult a tax expert to structure your investment effectively and take full advantage of available benefits.
