How does home ownership impact taxes?

In India, home ownership can have a significant impact on taxes. For instance, homeowners can claim deductions on their income tax returns for the principal and interest payments made towards their home loan. Additionally, homeowners can claim deductions for property taxes paid on their home. These deductions can help reduce taxable income and lower the overall tax liability.

Moreover, if a homeowner sells their primary residence after holding it for more than two years, any profits made from the sale are treated as longterm capital gains and are eligible for tax exemptions. The homeowner can claim an exemption for the entire amount of the gain by either reinvesting it in another property or by depositing it in a specified capital gains account.

It is important to note that the tax implications of home ownership can vary based on individual circumstances, and it is recommended to consult a tax professional for personalized advice.