Being able to buy a house on your own is certainly a dream come true moment for everyone. And if you are buying for the first time, you must know that there are several tax benefits associated with the home loan. These tax benefits are meant to unburden the pressure of home loans imposed on you. Read on to discover how!
1. It is possible that if you miss the payment of an EMI in a year and the interest liability is present, you are still able to claim the tax benefit on the interest payment.
2. In case you decide to sell your property before 5 years from the date of purchase or 5 years from the date you took the home loan, it is possible that the principal payment tax benefit get reversed.
3. You have to be a co-owner or a co-borrower to be entitled with deductions in tax. This rule is also applicable in the case of spouses, when one’s name is not on the loan book, he/she cannot claim a tax break.
4. In case of money borrowed from individuals or loans taken from friends and relatives, deductions can be claimed for the interest repayment.
5. When you have to pay an interest on the borrowed money or loans taken for the construction or repair of property, tax relief can be claimed after the completion.
6. For first time buyers with property value less than 50 lakhs and loan amount less than 35 Lakhs, the maximum deduction has been reduced to 50,000 from 1 Lakh.
7. Several charges related to home loans such as, prepayment charges, registration and processing are enabled for tax relief, courtesy the facts that these are considered as interest.
It should be of prime notice to the buyer that all these charges are enabled only in the case of actual interest repayments.