The Indian economy has been witnessing a boom in the recent past. However, rising property prices and growing interest burden on home loans are worrying buyers. The Budget has not offered any relief, but you can still make ample use of the existing provisions to save substantially on property investments. Heres how....
BUYING A HOUSE
Owning a house is not just a dream but a necessity, and there are several tax benefits as well. However, when buying a house, you would do well to consider the following.
(a) Its always advisable to go in for a housing loan. Interest paid on home loans can be deducted from your taxable income up to a maximum of Rs 1.5 lakh. This can be a double bonanza in the case of joint ownership. If the joint owners equally bear the interest burden, each gets a deduction up to Rs 1.5 lakh.
However, the total deduction cannot exceed the actual interest paid by the joint owners. So, if the total yearly interest liability is, say Rs 4 lakh, and the property is equally owned by three people , then each gets a deduction of Rs 1,33,333.
(b) Principal repayment up to Rs 1 lakh is allowed as a deduction from your taxable income under Section 80C, provided the loan is borrowed from a recognised financial institution.
The Indian economy has been witnessing a boom in the recent past. However, rising property prices and growing interest burden on home loans are worrying buyers. The Budget has not offered any relief, but you can still make ample use of the existing provisions to save substantially on property investments. Heres how....
BUYING A HOUSE
Owning a house is not just a dream but a necessity, and there are several tax benefits as well. However, when buying a house, you would do well to consider the following.
(a) Its always advisable to go in for a housing loan. Interest paid on home loans can be deducted from your taxable income up to a maximum of Rs 1.5 lakh. This can be a double bonanza in the case of joint ownership. If the joint owners equally bear the interest burden, each gets a deduction up to Rs 1.5 lakh.
However, the total deduction cannot exceed the actual interest paid by the joint owners. So, if the total yearly interest liability is, say Rs 4 lakh, and the property is equally owned by three people , then each gets a deduction of Rs 1,33,333.
(b) Principal repayment up to Rs 1 lakh is allowed as a deduction from your taxable income under Section 80C, provided the loan is borrowed from a recognised financial institution.
However, ensure that it is completed within the stipulated time. If you have already sold your property, and could not acquire a new house before the due date for filing tax returns, you can deposit the money in the capital gains deposit account scheme with any nationalised bank.
(c) Even those who do not want to buy a new house can avail of some tax benefits. All you need to do is invest the proceeds from the sale of the property in capital gains bonds issued by NHAI or REC within six months of the deal. The maximum investment permitted in such bonds is Rs 50 lakh, and these bonds can be redeemed only after three years from the date of investment.
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