Home Loan and Tax Benefits. Today, many home buyers buy through a home loan.
The main reason for this is the income tax benefit. A certain amount of income tax can be saved by taking a home loan and repaying it. You can find various information about the availability of tax benefits here.
When you take a home loan and repay it in monthly instalments, you will get tax exemption on interest up to Rs 1.5 lakh per financial year. Also, if you repay the principal up to Rs 1 lakh, you can also claim tax exemption under Section 80-C of the Income Tax Act.
If the husband and wife together avail of a ‘joint loan’, each will pay interest up to Rs 1 lakh 50,000 and the principal of up to Rs 1 lakh will be repaid. The money paid can also be exempted from tax.
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• At the time of deciding to take a joint loan with family members, if the parents are below 55 years of age and they are in some form of income, they can become co-borrowers. You can get a loan along with that. The income tax exemption for the same will be available depending on their contribution. Failure to pay the interest and principal monthly correctly will lead to problems in getting the full income tax exemption on the interest calculated by the bank.
• There is a possibility of tax exemption of up to Rs 30,000 on the loan amount taken for carrying out the necessary repair work after a few years.
• After a few years of buying a house, you can buy a second house with the amount in hand and savings or a bank loan. If the cost of the second house is high, you can get a ‘bridge loan’ from the bank and buy the house. Capital tax exemption can be availed if availed of loan for the above loan and for expansion work for the house.
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• When a bank takes a loan for a second house, the tax on interest can be deducted from the rent. If you own a plot of land and buy a house by selling it, you will get capital gains tax exemption. But the person concerned should not have any other house.
• There is no tax benefit on bank loans for housing plots. Only when a house with a plot is purchased while taking a home loan from a bank will you get tax benefits on the loan amount and interest.
• It is not economically appropriate to buy a second house entirely through a bank loan as we are paying 30 per cent income tax per annum. It is important to pay income tax on rent when the house is rented out and also to pay wealth tax if the house is worth more than the specified amount.
