The development authority of a particular area provides land development rights to developers and sells properties for a lease of 99 years. This means that anyone who purchases a residential or commercial property will own it only for a period of 99 years, after which the ownership is given back to the landowner.
Is there a minimum term for a commercial lease?
The period of time for which a commercial lease is granted (called the “term”) will vary depending upon the nature of the letting and the requirements of the landlord and the tenant. They are rarely granted for more than 25 years.
What kind of tax do you pay on a commercial property?
People who invest in commercial properties, do so either for their own use or for the purpose of letting it out. Rentals received from any property owned by you, is generally taxed under the head ‘ income from house property ‘ in your hands. This applies to all properties, whether residential or commercial.
Can You claim interest on a commercial property?
You can also claim the full interest as business expenditure, without there being any limit. Please note that no deduction is available under Section 80C for home loan taken for such commercial property, for repayment of the principal amount, as this is available only for residential property.
What are capital gains on sale of commercial property?
Alternatively, you can invest the indexed capital gains in capital gain bonds of specified institutions and claim exemption under Section 54EC. In case of commercial property which is let out, the profit on sale of such commercial property will become capital gains.
How to claim exemption from commercial property tax?
You can claim exemption under Section 54F, by investing the net proceeds obtained from the sale of commercial property in a residential house property, if the same has been held for more than 24 months as per some of the judicial pronouncements.
