How to save Tax on Commercial Property?

How to save Tax on Commercial Property?

When Kharar and Mohali region is expanding and more commercial buildings, such as the best shopping center in the Kharar area are making their way, more and more buyers are planning to invest in Commercial properties. The rising demand sometimes blinds you from understanding more about tax-related points. To ensure your well-being, here are some of the points discussed to help you find avenues of tax savings on the purchase of a commercial real estate in Tricity.

Many people have a misconception that investments in Residential real estate properties in Kharar are more beneficial than commercial concerning the tax benefits. Undoubtedly, when you buy a house in Mohali, you can expect tax deductions under Section 80C and Section 24. But there are some tax deductions available for buyers of commercial properties like Nirwana Square One. But before that understand a few things –

Tax treatment on rentals

Mostly, the people who invest in commercial real estate put the property on rent. Now, the income through rents will be the annual income and taxable. But only after specific types of expenditure are deducted from it.  It falls under the ‘Income from House Property’ category and is taxable. In circumstances where you sublet it as you do not own it, the income falls under the ‘Income from Other Sources’ category.

 Tax treatment on income

Many aspire to invest in shopping centers. Such commercial properties rate will surge in the future and currently, it seems the best option to invest. For those, it is essential to remember that such properties from which you earn income by running your business fall under the ‘Business Income’ category.

Note – Avoid showing your rental income from commercial real estate as Business Income to claim other expenses under the rental income category as there is a higher chance of landing in trouble.

Deductions available for Commercial Property Owners

There are a few deductions available for buyers of commercial real estate. These are –

Standard deduction: It is important to understand that this deduction is for repairs and other renovations of your commercial real estate.  You can avail of it at a flat rate of 30 percent. If you use this deduction intelligently, you may save a reasonable amount in taxes.

Loan Interest Deduction: If you are planning to invest in a shopping center near Chandigarh by taking a loan, you can claim deductions on the repayment of your total loan interest. The best thing is that you can also avail of tax deductions on the prepayment charge or processing fee in this category. The only technical glitch here is that it is available from the year of possession after the construction is completed.

Deductions for earning income from your business property: In cases where you make income from commercial real estate through running a business of your own, you may claim depreciation along with the loan interest deduction on the same property. Simultaneously, you may claim tax deductions for maintenance and repairs.

Remember you may claim the interest and standard deduction, for the net annual value. It is the amount a buyer releases after deducting municipal taxes from their gross rental amount.

Key Takeaway Points


There are tax benefits that a commercial property buyer can claim. But only after the purchase of the property. The deductions are not as enticing as the residential properties. So, if you are buying a house on sale in Mohali, you can claim better deductions. Still, it doesn’t mean commercial real estate buyers cannot claim any deductions. So, don’t be afraid when buying a commercial property. Go ahead with your investment plan and seek help from a genuine real estate agency in Mohali. post-purchase. Make sure you choose the right property for investment. Otherwise, you may get duped and face losses.

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