One can also say that buying your own property is not only the most costly transaction but also the most important one. Even though there are many financial institutions dealing in home loans available to enable you to realize your real estate visions and ease the burden of hefty payments, we always tend to seek out better offers where you invest the least amount and get the highest. The best part is that there are several home buyer tax benefits that you can take advantage of to alleviate the burden on your budget while enjoying the comfort of your target home. Let’s take a look at a few of them.
Exemption for Payment of Interest on Home Loan
Construction of your own house is rather complicated and forever changing, but home loans remain unchanged and are very simple to apply for. In addition to being an investment that is acceptable, there is more than one way that a home loan can be advantageous because it has many tax benefits. You can claim tax benefits under Section 80C, 80EE, and 24(b) of the Income Tax Act which benefits you on the repayment of the principal amount as well as the interest component of the home loan.
Benefits for First Time Homebuyers
If you are a first time homeowner, you qualify for a tax relief of up to Rs. 50000, as per the provisions of section 80EE of the IT Act. This is an extra claim outside the deductions that are on the principal and the interest paid. However, in availing of this benefit the house in question must be less than 50 lakhs and the loan amount must be less than or equal to 35 lakhs.
Mortgage Exemption for the Principal Amount
In this case, as a tax payer, and a first time home buyer, you will be able to relax instead of stressing out about your tax claims as under section 80C of the IT Act, the homebuyers are entitled to a tax deduction of up to Rs. 1.5 lakhs on the amount repaid as principal on their home loan. But, if the property was acquired by the owner, such owner must claim this deduction only after the period of owning the property has been five years for the applicable deduction to be claimed. If the property is disposed of within 5 years of the acquisition of the property, then all the deductions claimed will be deemed to be the taxable income of the owner during the year the property is sold.
Interest deduction
According to Section 24 of the IT Act, homebuyers in India are entitled to get a tax deduction of a maximum of Rs 2 lakhs for the interest payment made on the home loan.
Exemption for Co-Owners
In a jjoint loan account, if both the applicants are co-owners of the property, then both can claim a tax deduction. Each of the applicants is entitled to an interest deduction of maximum of Rs 2 lakhs and Rs 1.5 lakhs in relation to the loan repayment.
Exemption for Stamp Duty and Registration Fees
Apart from the home loan related tax benefits, home purchasers should also be entitled to claim deductions against any legal fees such as the stamp duty and registration fee. The IT Act under section 80C allows a homebuyer to get a deduction of Rs 1.5 lakhs in the year of construction of the house. However, to claim this deduction, the taxpayer should take the following conditions into consideration;
- The construction of the property should be completed. The property can be occupied just as the completion of the construction.
- The house is occupied for self kone’s use rather than rented or leased out.
Both individuals and Sukanya Samriddhi Yojana can claim this deduction to maximize their taxRs 1.5 lakhs deduction under section 80 C to build better tax returns.
GST Exemption Benefit for Making Housing Affordable
To enable the remaining 80% of the Indian population to become homeowners, the government of India provides the benefit of subsidized GST rates on affordable Housing. The Investors belonging to a Low Income Group (LIG), Middle Income Group (MIG), and Economically Weaker Sections (EWS) are now provided concessional GST tax of only 8%. Also, in addition to this concession, homebuyers shall be provided a subsidy on interest through the Credit-Linked Subsidy Scheme (CLSS). Furthermore, developers are encumbered not to levy GST since the 8% GST would be recoverable from input tax credit.
Additional Tax Benefit on Projects Approved by Section 80-IBA
Additional tax benefit on the projects approved from June 1, 2016, onwards and ending March 31, 2020, is covered under the enlargement of Section 80-IBA indicating the willingness of the government to promote affordable housing projects in the said time frame. This indeed boosts the homebuyers in search of a Dream Location at a relatively cheaper rate that would be a beneficial taxation policy.
Capital Gains Exemption on Multiple Properties
One of the notable points arising from Budget 2019 is to allow the rollover of capital gains on two residential instead of one. According to the Section 54 of IT Act, the taxpayer is allowed to rollover the gains from sale of one property. budget this time extends this benefit to taxpayers wishing to construct two residential houses claiming a capital gain up to Rs 2 crore only once in a lifetime.
Conclusion
There are so many advantages available, but purchasing a property gives various reasons as to why it can be an asset to the individual and assists in encouraging the concept of owning a home. Emphasizing on the claim further, apart from the reduced burden on your pockets, investing in real estate also makes you the possessor of an elegant home, which in itself is a reward of substantial worth.
For more information about Dream Location and to search your dream property, please visit Dream Location on Google Map. Contact us today to know more about the best real estate deals in Delhi and North India; we will connect you to the right property investment.