Residential Land

The title deed of the plot of land needs to be clear and marketable. The title deed (proving ownership of the land) needs to be in the hands of the seller of the plot of land.

You can trace the ownership of the land using the title deed. Who the previous owners were? The change in ownership of the land (as it is transferred between owners as a gift , sale or an inheritance).

Always examine the original title deed of the land.

A sale deed of the plot of land gives the seller the right to sell. It transfers the ownership of the plot of land from the seller to you.

Make sure that the seller of the plot of land has the sale deed (The right to sell the land to you).

You have to make sure that your plot of land has been converted from Agricultural land to Non Agricultural land. This is also known as the land use conversion (DC Converted land).

Only a DC (Deputy Commissioner) can convert the agricultural land to a non agricultural land and this land is called DC converted land.If your plot of land is not DC converted then you will not be able to get an A Khata certificate for it .It has a B Khata certificate.

The word Khata means "account". Khata helps you find out the details of the property from the Municipal registrar. It means the owner of the land is paying his property tax.

You have A Khata properties and B Khata properties.

A Khata properties come under the BBMP (Bruhat Bengaluru Mahanagara Palike) jurisdiction and signify a legally developed land with valid sanctions and approvals.

B Khata properties are within municipal limits (BBMP) or outside municipal limits without valid licenses and sanctions. The B Khata does not actually exist. It is merely a record maintained by the BBMP in a B Register. Your record in the B Khata does not give you ownership of the property but merely states that you are paying your property/land tax.

You can convert B Khata to A Khata by paying a penalty to the Government.You need to make sure that the plot of land you purchase has an A Khata certificate to avoid any hassles.

• If the plot of land is purchased for construction purposes such as a residential house then the total amount taken is combined and tax benefits are available on the loan amounts. The tax deductions on interest are available only once the construction is complete. In the year of completion the interest on the land loan as well as the construction loan till the end of the previous year shall be taken together and one fifth of this cumulative interest plus the interest payable for the specific year will be eligible for deduction.

• Interest accrued during the construction period can be claimed as deductions over five years in equal installments starting from the year of completion of construction. The principal repayments made on the home loan are eligible for income deductions under Section 80 C.

• In case of a plot purchased for investment purposes if the plot is vacant it does not qualify for tax deductions. If the plot is rented out and the rental income is taxed as business income or income from other sources the interest paid on the loan to buy the plot is tax deductible. There are no tax benefits on the repayment of the principal of such loans.