Hyderabad, January 22,2022 :Buying a house is everyone’s dream but to be able to get one without any external financing like home loans may be a slight pinch in the pocket. Applying for a loan for your house in todays day and age may seem like a hike to the Everest but guess what makes it all worthwhile – tax saving on home loan! The Indian Government has made provisions to encourage all it’s citizens to fulfil their dream of owning their own “abode of happiness” by giving tax rebate on home loans. Any person with the liability of a home loan gets tax deductions under the Income Tax Act 1961. Does this now make you feel one step closer to your dream of possessing a property you can call home?
How many of you know it all about home loans and the paraphernalia surrounding it? For the ones who don’t know anything about home loans to the ones who knows bits and pieces of it all, this article is a good start to learn from scratch. We are sure by the end of this article, your visual of the dream home is going to get clearer along with having a good understanding of the way ahead.
What are home loans?
Home loans are secured loans that are taken to buy a property by offering the same property that you are buying as a collateral. Home loans most often have low interest rate, high value funding and a long tenure to facilitate the applicant with easy repayment. Having said that, the tenure can be a calculated number of your choice thus making it super duper convenient for you.
On completion of repayment, the property will then be transferred to your name.
Did you think home loans were this easy to understand? Well, here’s more to further simplify it for you. After defining what exactly are home loans, it’s now time to understand what makes it, after all? The answer is pretty easy:
A home loan comprises of 2 major components both of which generate house loan tax exemption:
- Principal amount
- Interest amount paid on the loan amount.
Here’s something you didn’t know! You can avail income tax rebate on both the home loan components viz. principal amount as well as the interest paid under the section 80C and 24 (b). Let’s see how.
Tax deduction on interest paid
The home loan interest tax benefit can be claimed under the section 24 (b). You can claim the tax deduction from your gross earning on the interest amount paid for the home loan you applied for. For a home that is occupied by you, you can claim a tax deduction of upto Rs. 2 Lakhs.
However, the home loan tax exemption can be claimed on an accrual basis (claiming for the rebate annually).
Tax deduction on principal amount
Under the section 80C of the Income Tax Act 1961, you can claim a rebate of upto Rs. 1.5 Lakhs. This deduction includes registration and stamp duty charges that you may have made while purchasing the home. You can claim this amount along with other tax saving provisions like fixed deposits, provident funds, insurance premiums and more.
However it is important to note that it is wise to not sell the house within 5 years of it’s purchase. If sold the income tax benefit on home loan will be added to the taxable income of that particular year.
In today’s day and age where education, travel, medical or entertainment have all become some of the most exorbitant expenses, having one person shoulder the whole burden of buying a house and repaying the loan makes it a tight situation (though, not impossible) to handle. Having your partner share your burden not only divides the load but also multiplies the gains. Really? Let’s know how.
How to utilise the available deduction to the fullest?
If you and your partner are both earning members, get a joint loan on both your names. That should be your step one! Remember it? Dividing the stress and multiplying the gains? Here’s answering you “how”? When you apply for a joint home loan together, both of you can claim an amalgamated home loan tax benefit of Rs. 3 Lakhs on the principal amount under Section 80C of the Income Tax Act. Additionally, under Section 24 you can be eligible to get a rebate of not only Rs. 2 Lakhs but Rs. 4 Lakhs on interest repayment.
This aforementioned bit of information was for the ones who are eligible to apply individually as well. If you are not eligible to apply for a home loan on your own, applying for a joint home loan with your partner makes the chances of you becoming eligible for the loan better. Now that rang a bell, isn’t it? Go to your bank today and find our your options.
Now that you know, a home loan is your first step towards buying your dream home, let’s also understand what is it like to be a first time buyer rather applicant?
Tax deduction for first time buyers
As a first timer, you have the advantage of availing a deduction on your interest amount over and above Rs. 2 Lakhs under Section 24. However to be eligible to get the above mentioned tax benefits you should be able to fulfil the following few criteria. They are:
- The value of your property must be of Rs. 50 Lakhs or less
- The loan amount applied for must be Rs. 35 Lakhs or less
- On the date of sanction, you as a first time buyer must not have any house owned by you
- The loan applied for must be sanction by a financial institute or a housing finance company.
Although, applying for a home loan does come with a headache of monthly EMI’s but it’s important to look at the good side of it. A home loan greatly contributes in improving your credit score in addition to it being a great saver for tax payers. Last but not the least, a home loan gives you something you can call “your happiness”. Are you looking for apartments for sale in Hyderabad? Along with financing options? You have landed on the right place onProperty Adviser.
Corporate Comm India (CCI Newswire)
