There are a large number of first-time home purchasers who look for clarity on tax benefits. The questions of home purchasers are common and all are identified with the tax benefits related to a home loan.
An individual taking a home loan gets income tax benefits under numerous sections: Section 80C, Section 24 and Section 80 EEA.
These sections are useful and give an advantage of up to Rs 5 lakh, making it an extremely attractive.
Section 80C
The advantage from income tax under section 80C for the first-time homebuyer is up to Rs 1.5 lakh. This advantage of tax can be guaranteed under the home loan stamp duty as well as home loan principal categories. There are sure conditions to this claim of tax benefit such, as the individual profiting the home credit will undoubtedly save the property for at least five years from the date of ownership.
Section 24
The tax exception for the home purchaser according to section 24 of the income tax act would be an exclusion of up to Rs 2 lakh. This exclusion would be under the home loan interest category. Notwithstanding, there is a condition on such exclusion and that is a relative or even taxpayer himself should dwell in the property for which the loan is taken.
Section 80 EEA
Section 80EEA additionally offers income tax advantage for the first time home purchasers of up to Rs 1.5 lakh. Nonetheless, the condition here is that the stamp duty value of the property, being residential, ought to be up to Rs 45 lakh only. Also, the residency for the approval ought to be in the time period of April 1, 2019 to March 31, 2022.
There are some most fundamental condition to be remembered:
- Borrowed loan should be financed from a financial institution
- No case ought to be made under income tax section 80EE
- No residential property should be for the sake of assessees till the loan is sanctioned
- The stamp duty value of property should be under Rs 45 lakh
For example, suppose an individual purchases a house for Rs 50 lakh and taking Rs 40 lakh as loan, i.e., 80% loan, with 7% interest for 20 years residency. The EMI for such a loan would be Rs 31,000 and the total amount paid in the first year would associate with Rs 3,72,000.
The claim of Rs 95,000 can be taken under 80C, while the Rs 55,000 (from the Rs 95,000) can be taken for stamp duty payments, and is just valid for the first year. The annual earning is taken at Rs 15 lakh at this point and Rs 2,00,000 would be permitted under section 24.
Under the section 80EEA the individual can likewise claim Rs 77,000 interest amount.
Getting ready for purchasing:
Begin saving for your down payment: There is a necessity of having at least 10 to 25 percent of the amount as down payment while buying a property. On the off chance that the property value comes to Rs 50 lakh, one requirements to have a corpus of around 20 lakh close by.
Budget ought to followed: It is smarter to be affordable for the time being.
Research for the property: Take different ideas and tips prior to buying the house. Some other property with better rates and value proposition can likewise be thought of.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Economy Bee journalist was involved in the writing and production of this article.
