The housing loan sector is expected to grow by 17-19% in the fiscal year 2019-20. The introduction of various schemes by the government to provide affordable housing for all is considered to be the main reason behind this growth. Indian citizens can also avail attractive tax benefits on home loans that make such credits more affordable.
In the financial budget of 2019, the government proposed an increase in the tax benefits that citizens can avail. They can now avail an additional tax benefit of Rs. 1.5 Lakh on the interest part of their housing credit. It ensures that individuals can generate more savings from such advances.
Individuals can avail home loan tax benefit of up to Rs. 1.5 Lakh every year on the principal repayment of their housing loans. Borrowers are not entitled to avail tax benefits if they transfer the ownership of a property within 5 years of possession. If they do so, the tax benefits claimed in the previous years will be considered as an income of the individual. Also, they will be held liable to pay the necessary taxes on the amount.
Similarly, borrowers cannot avail tax benefits for under-construction property under this section. The concerned property should receive a certificate of completion before an individual can claim tax benefits against principal repayments.
Furthermore, individuals can avail tax exemption on the charges associated with their housing credit like stamp duty and registration fees. However, they can claim this amount only in the first year of their housing loan tenor.
Individuals can claim up to Rs. 3.5 Lakh on the interest amount of their home loan under this section. The deduction limit was increased to Rs. 3.5 Lakh from Rs. 2 Lakh in the current financial budget.
Individuals can avail tax deductions up to Rs. 3.5 Lakh only if a concerned property is self-occupied. There is no upper cap for a property which is not self-occupied or rented. However, the cap will be Rs 3.5 Lakh if an individual has to stay in a property not owned by them due to professional reasons.
The deduction of Rs. 2 Lakh will only apply if the construction of a property is completed within 5 years of availing home loan. If construction is not completed within this period, borrowers will only be entitled an amount of Rs. 30,000 for tax exemption.
Key points to remember
Borrowers are required to keep the following points in mind before they claim home loan tax rebate.
Along with income tax benefits, borrowers need to ensure that they avail an advance from a lender that offers the best home loan interest rate to generate more savings.
Bajaj Finserv is one such NBFC that offers housing loans with affordable interest rates along with a wide range of other benefits.
They also provide pre-approved offers on such credits to make the process of availing such advances faster and hassle-free. Pre-approved offers are also valid on a plethora of financial products and services including business loans, personal loans and more. You need to provide a few essential details to check your pre-approved offer.
The changes in the financial budget of 2019 will surely provide more savings for the borrowers. However, they should be aware that the latest deduction rules are only valid on properties worth less than Rs. 45 Lakh.