Your dream for a home sweet home is possible using a home loan. Many lenders provide affordable home loans. A home loan is a solution for your finance when you buy a home. Purchasing a home is a big amount and you would not be having such a big amount in hand to spend. Many banks provide home loans where you need to go in through its process for getting the loan so that you can purchase it.
Once you avail your home loan you can monitor the payment of it using a home loan EMI calculator. Apart from buying a home using a home loan, having a home loan would help you with many tax benefits under the Income Tax Section 80 C. While you take a home loan, you need to be conscious of the various primary benefits that it has towards your tax benefits. Let us discuss that in detail.
Interest paid towards the borrowed amount – You would have availed loan either to purchase or to construct one. You need to complete the construction within five years from the financial year as to when the loan is given. Loan EMIs contains two main components. They are the principal repayment and the interest. Under the Income Tax section 24, you may claim for a tax reduction of about Rs. 2 Lakh per year towards the interest given on your home loan. But in case you had given the property on rent, then there is no tax benefit available over the interest that you pay during the financial year.
Pre-Construction period interest payment – When you process for a home loan for a property that is under construction, you will have to still pay the loan EMIs. Here, the existing tax advantage on the interest paid for the financial year would not be available. But the legal guidelines specify that a pre-construction interest payment would be taken from your income in about five installments. These installments would start once the construction is over or when you get the property.
Registration Charges and Stamp Duty – You are also eligible for registration charges and stamp duty tax deduction under the Income Tax Act Section 80 C. But such deductions must follow the limit of about 1.5 lakh per annum as mentioned under this section. You must be aware that the deduction for registration charges and stamp duty is applicable only for the financial year when you acquire these expenses.
Principal Repayment – Under the Income Tax section 80 C, you can get tax benefits on the principal payment. During a financial year, you get a maximum deduction of about 1.5 lakh. You should know that you are qualified for such kind of deductions only if you own the property until five years of procuring possession and not sell it. In case you sell the property, all the deductions that you have requested earlier would be included in your income and the tax would be applicable.
First-Time Buyers –The Income Tax Section 80 EE permits you with an extra deduction of about Rs. 50,000 in case you are a first-time buyer of a home. But the home value should not exceed Rs. 50 lakhs. Also, you should not apply for a home loan for an amount that exceeds Rs. 35 lakhs to get this extra tax benefit.
Join Home Loan Benefits – In case you have got the home loan in joint connection with your spouse or any other family member, the tax benefits can be used to all the applicants. This indicates that the Income Tax section 24 and section 80 C deductions that are for interest and principal repayment respectively can be availed by the joint applicants. But there is a maximum limit of about Rs. 2 lakhs on the interest payment and Rs. 1.5 lakh on the principal repayment and this much followed rightly. Also, ensure that the joint applicants should also be co-owners for the applied property to get the tax benefits.
Home loans are a benefit for any individuals who wish to get their own homes. But it is suggested you find your monthly expense with the help of the home loan EMI calculator so that you can be sure that you need not take on a liability where you would end up in financial stress.