Are you aware that when you buy property you have to pay certain taxes. That is why income is taxed as per individual income. So government just to make property purchasing higher among individuals and make it more lucrative, so government offers some tax benefits to those who buy property taking home loans. Taking home loan and buying property has other benefits like you can purchase property with lower capital in hand. Now a day’s home loan interest rates are even too low that one should always go and take home loan to buy property.
So, Let’s check what all Tax rebates are available for people who are buying property by taking home loans.
TAX REBATE ON HOME LOAN
Once you take home loan you get Tax rebate on The Principal and Interest Part through various sections of Income Tax:
- Tax Deductions Allowed on Home Loan Principal, Stamp Duty and Registration Charges: Under Section 80C; Whereas upper Limit on Tax Rebate is Rs. 1,50,000/- per annum and Rs. 2,00,000/- for Senior Citizens
- Tax Deductions on Home Loan Interest: Under Section 24, 80 EE, 80EEA; Whereas upper limit on Tax Rebate is Rs. 3,50,000/- per annum and Rs. 4,50,000/- per annum for Senior Citizens.
Now, Let’s understand all things in Details for DEDUCTION ON PRINCIPAL AMOUNT.
Section 80 C : These deductions are available on any property construction or purchase of property. 80 C has many other heads other than home loan principal amount like provident fund, public provident fund, life insurance policies, stamp duty-registration charge on property purchase, etc., are tax free. But, individual can only claim up to Rs 1,50,000/- per annum only.
For e.g. : As you have Rs. 1,50,000/- as maximum limit in 80 C, and you are depositing Rs 50,000/- in a year in your Public Provident Fund and pay Rs 50,000/- as your life insurance premium, so you are left with Rs 50,000/- from your home loan interest payments under Section 80C.
Terms and Conditions to be noted to avail tax benefit under 80C:
– If you have taken a loan for property construction and you want to avail benefit, then you need to complete construction with 5 years of taking loan.
– You cannot sell your home within 5 years of possession if you have taken Tax Benefit.
– Tax deductions are always claimed on the amount paid in current year.
How can we maximize tax rebate under Section 80C?
One should always buy property jointly so that both borrowers can claim Rs 1,50,000/- as tax benefit in their respective incomes. Both persons should be owner of property and even co-borrower.
TAX DEDUCTIONS ON HOME LOAN INTEREST:
For home loan interest there are some sections in which you can take Tax Benefits:
Section 24: This section allows property owners deductions of up to Rs 2,00,000/- per annum towards interest payment of Home Loan if that property is self-occupied. Some Conditions are levied to get benefit under Section 24, which are as follows:
– Loan has to be taken in a financial year
– Interest calculation certificate is required from the bank.
Deductions under Section 80 EEA
This section gives benefit on only Property buying for the first time i.e. first time buyers can avail benefits through this section where one gets extra additional deduction of Rs 1,50,000/- in one year. Some conditions are applied under this section like this section is only available for first time property buyers, this section rebate is only available who are claiming benefit under section 80EEA, Property value should not exceed Rs. 45,00,000/- , Carpet area of property should not increase 60 sq mt in big cities and 90 sq mt in all other cities and loan availed should be from banks or housing finance companies.
Connect for More details : HEIMAT ADVISORY
Author: NIKITA DAGAR
