Tax Benefits on Home Loan

News About Tax Benifits on Home Loan

• Taxes to be paid on home purchases, according to Tax department

  Now, most of us already know that purchasing a home requires you to pay a number of taxes. But, for some people this has been a little unclear.

  As per the tax authorities, the taxes that need to be paid are as follows:

  Registration charges

  Stamp duty

  Service tax

  Value-added tax

  Once after paying these charges will a property be registered by the government.

  

  18th April 2017

• Government reduces benefits on tax

  Tax benefits have been cut down by the Government. According to the new tax laws, the borrower can deduct the whole loan amount after the rent has been adjusted. Borrowers of the self-occupied properties can avail a deduction of Rs.2 lakh on home loan interest repayment.

  The amount that is beyond Rs.2 lakh can be carried forward to eight consecutive assessment years. As the interest component of the HL is higher during the initial years, financial experts state that borrowers might not be able to adjust the deduction with the interest paid.

  

  4th April 2017

• New Income Tax Rule on Home Loans

  After the announcement on the New Year’s evening about changes to the home loan policy, Prime Minister Narendra Modi had also announced Pradhan Mantri Awas Yojana that offers subsidy on interest rates for home loans. The government is also going to cut down tax benefits that borrowers availed on properties let out on rent. With effect from 1st of April, the interest paid above Rs.2 lakh can be carried forward for next eight assessment years. There are many more Income Tax rules that are introduced for the reality sector. With the implement ant of Credit Linked Subsidy Scheme for Middle Income Group (MIG), it will interest to see the improvement of realty sector in India.

  

  3rd April 2017

• Availing a Home Loan Comes with Tax Benefits

  Individuals who avail a home loan with the intention of going ahead and purchasing a home can make the most of a number of tax benefits. The most common tax benefits associated with availing a home loan include deductions under Section 80C of the Income Tax Act, wherein individuals can claim up to Rs.1.5 lakhs as deduction on repayment of the principal amount borrowed.

  The next benefit that can be availed by purchasing a home after taking a home loan is deductions under Section 24 of the Income Tax Act, where in a tax deduction can be claimed to the extent of Rs.2 lakhs on the interest component related to the repayment of the home loan. Such a benefit can be claimed provided the borrower and his/her family live in the property or in case the property has been left vacant. But if the property were rented out, deductions can be claimed on the whole interest component. In case an individual has availed a home loan together with a member of the family, both individuals are eligible to claim deductions on the interest component, subject to a maximum of Rs.2 lakhs per individual.

  Another tax benefit associated with availing a home loan to purchase a home is deductions under Section 80EE of the Income Tax Act, wherein individuals who are purchasing a home for the very first time are eligible for tax deduction in case the value of the home loan is under Rs.25 lakhs, and the value of the property is under Rs.40 lakhs. Moreover, individuals who purchase a home for the first time have no requirement that compels them to occupy the property themselves if they wish to make the most of the aforementioned deduction.

  

  5th March 2017

• Union Budget 2017 - Realtors are expecting increase in tax deduction limit for home loans

  The Union Budget 2017 will be presented on the 1st of February, 2017. The real estate market in India is expecting positive changes to rise against the demonetization situation that impacted the entire nation's economy. The Reality is expecting the government to increase the tax deduction limit on home loans that will welcome borrowers to come forward in buying a house. The announce of 'Housing for all by 2022' has made the real estate market more interesting, considering that fact various schemes have been introduced to promote housing, the real estate market has a lot to look forward to from the Budget 2017.

  

  30th January 2017

• A rise in tax rebates on home loans expected in 2017 Union Budget

  The 2017 Union Budget is expected to be presented on February 1st. According to a report by CNBC-TV18, the budget is expected to be taxpayer-friendly to balance the cash shortage brought about by the demonetisation of high-value notes last November. The budget is expected to be centered on agriculture, MSME and housing sectors to balance the impact of demonetisation. According to a study by All India Manufacturers Organisation, there has been a 35% job loss and 50% revenue decline in the small scale industries post demonetisation. An increase in tax rebates on home loans will help the banking sector and the sluggish real estate market.

  

  16th January 2017

• Tax Benefits on Home Loans

  The Income Tax Act provides for deductions in respect to home loan interest rates and principal under Section 24(B) and Section 80(EE). Section 24(B) of the Income Tax Act provides for a tax deduction on interest paid for Home Loans. Interest on Home Loan is permitted as a tax deduction on accrual basis and not on a paid basis, even if the books of accounts are maintained on cash basis. The tax deduction on the interest on home loan can be claimed only if the capital amount borrowed has been utilized for construction, purchase, renovation, repair or reconstruction of a commercial or residential property. Under this definition interest includes service charges, commission, brokerage, prepayment charges, etc. A deduction will not be provided for penalty on unpaid interest. A deduction will be provided for both personal loans as well as home loans taken from any institution or person. If a person pays the sale price of the property to the seller in instalments with interest and does not raise the funds from a third party, the interest paid by him/her is also a permitted deduction. Interest on money borrowed which is payable outside India is not permitted as a deduction under Section 24(B), unless the tax on the same has been paid or deducted at source to in respect of which there is no person in India who may be treated as the recipient for such purpose. For claiming a deduction under Section 24(B) the assesse should be the owner or deemed owner of the property and the loan should be in the assesse’s name. The maximum deduction provided for self-occupied property is Rs.2 lakh and there is no limit of deduction for let-out property. Under Section 80(EE) of the Income Tax Act, persons who are first-time homebuyers can claim a further deduction of a maximum of Rs.1.5 lakhs if the loan is sanctioned by a financial institution between April 1st, 2017 and March 31st, 2017 and does not exceed Rs.35 lakhs. The value of the residential property should not exceed Rs.50 lakhs to be eligible for deductions under Section 80(EE). Please note that an individual may only claim tax deductions under either Section 24(B) or Section 80(EE), not both.

  

  11th January 2017

• Housing society certificate sufficient proof of occupancy for home loan tax sop

  A tax deduction of up to Rs.2 lakh per year can be claimed for interest paid on housing loans. This deduction is applicable to any individual taxpayer who has taken a loan to procure a residential property which is self-occupied. The deduction can be obtained by an individual if the property is in the possession of the individual five years from the end of the financial year in which the loan was taken. The stipulated tenure of five years has been increased for the financial year 2016 – 17. Individuals will need to submit an Interest Certificate and a Certificate of Occupancy. The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) ruled that a certificate from the hosing society to validate occupancy should be sufficient proof of occupancy to claim this deduction.

  

  9th December 2016

• 100% rebate on property tax to owners who suffered in Jat Quota Stir

  Haryana government has decided to offer a rebate of 100% on property tax to property owners who have suffered property loss or damage in the Jat Quota riots. These include all commercial, residential and institutional property owners. The rebate is applicable for a period of one whole year starting from April 2016 to March 2017.

  Apart from this the Haryana State Government has already waived off electricity bills of people whose properties were affected (or looted) during the Jat quota struggle that happened in February 2016. Collection of property tax still is a huge challenge for state governments across the country. The ever-growing real estate has added fuel to this by making construction-tracking even more difficult for the tax department.

  

  24th June 2016

• Form 12BB introduced to claim LTA, HRA tax rebate

  A standard Form 12BB to claim income tax rebate on LTALTC (Leave Travel Allowance Concession), HRA (House Rent Allowance) and interest towards home loans has been introduced by the income tax department. Taxpayers will have to submit proof of travel to their employers in the form in order to claim LTALTC benefits.

  In case the taxpayer is paying a rent higher than Rs.1 lakh in a year, details such as name, address and landlord’s PAN number should be provided to the CBDT (Central Board of Direct Taxes). For a claim for tax rebate on home loan interest, the lender’s name, PAN details and address have to be furnished.

  

  9th June 2016