India, Nov. 1 -- Meera Soni, 35, a doctor, owns a two-storey building in Pune. She uses the ground floor as her clinic and lives on the upper floor. The total value of the property, excluding the land value, is Rs.80 lakh. Since half of the property is used for professional purposes, she can claim depreciation on that portion at 5 per cent per year under the Income Tax Act. This means she can deduct Rs.2 lakh (10% of Rs.40 lakh) from her taxable professional income, effectively reducing her overall tax liability for the year.

Real estate depreciation functions as a tax shield by allowing investors to deduct the property's value loss from their taxable income. "In India, the Income Tax Act allows for various rates, such as 5% for resident...