Home Loan Tax Benefits on an Under Construction Property
Home Loans are a convenient way of arranging money to pay for a home. Further, Home Loan interest rates are quite low now, which makes buying a home with the help of a Home Loan even more affordable.
Home Loans not only make it possible for people to buy their dream home, but they do so while allowing individuals to save money by way of tax benefits. If you wish to save money, invest in an under-construction property as realtors quote lower prices for these properties in comparison to properties that are ready to move in. Further, the Home Loan borrower can avail of under construction property tax benefits and save more money.
In this article, we will focus our attention on how can one avail of tax benefit on Home Loan for under construction property.
Income Tax Benefit on Home Loan for Under Construction Property
Section 80C of the Income Tax Act makes provisions for tax relief on Home Loans availed of to buy under-construction properties. If you took a Home Loan to buy an under-construction property and are currently paying EMIs for the same, Section 80C of the Income Tax Act allows you to claim deductions up to Rs. 1.5 Lakh on payments made towards principal repayment.
Further, the Income Tax Act also allows borrowers to claim deductions up to a total of Rs.2 Lakhs on the payments made towards interest repayment. However, Home Loan borrowers must know that they can claim this deduction only after the construction of the property has been completed.
Tax Benefits on Stamp Duty Paid for the Acquisition of an Under-Constructed Property
Over and above the deductions claimed on the payments made toward principal and interest repayment, one can also claim tax benefits on the stamp duty paid for the acquisition of an under-construction property. Borrowers can claim deductions up to the limit of Rs.1.5 Lakh on payments made toward stamp duty and registration charges. However, one can make this claim only after the construction on the property has been completed. In the case of joint Home Loans, both co-applicants can claim deductions separately.
Further, Section 80EEA of the Income Tax Act states that if the under-construction property bought had stamp duty charges falling under Rs. 45 Lakh, the borrower can claim deductions up to a maximum of Rs.1.5 Lakh on the payment made toward interest repayments.
Why Tax Savings on Home Loans Help
It is not easy to understand how tax deductions work in the case of under-construction properties. The good news is there are several income tax calculators available online these days that can help you understand how much money you can save by way of tax benefit on under construction property.
Home Loan interest rates are the lowest they have been in a long time. Property prices continue to rise and though this may have made buying your dream home slightly difficult, continued property value appreciation is a good thing as your investments will surely bring returns in future. So, if you have been planning to buy a home, now is the right time. Apply for a Home Loan today and make your dream of becoming a homeowner a reality while also saving money by way of tax benefits each year.
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