In: Accounting
An individual can invest in real estate for the following purposes:
1. For his own : No tax consequences.
2. For business purpose: If the object of his business is giving rentals to others, then this will be treated as business income. Accordingly it will taxed after dedcuting the busniness expenses at the rate applicable to respective country ( Ex - In india All individuals are taxed based on slab rates)
3. For retal purpose: An individual who bought a property and given renatal to others which is not his business objective, then it will be treated as incomefrom house property. It will taxed by deducting some municipal taxes , some standard deduction and taxed based on the rates applicable to repective countries.
4. For sale: Individuals who invest in real estate and treats them as an investment and will be sold later in further years should pay tax on capital gains at the time of sale( Sale value - Purchase value).
Rules that we follow in telling the property as rental one or owned one will entirely based on the business objective, MOA, rental agreements and other documents.