Buying a home in India comes with many benefits. You have a safe and secure place to live in, and it is the best kind of investment. It is a risk-free investment and you only have to put in a minimal effort after the registration is done.
Tax benefits are higher when you purchase a property in INDIA. Firstly let’s get into the details as to the tax benefits that a homeowner could avail.
No. 1- Section 80 C: The principal amount paid for by the buyer is allowed for a tax deduction. The maximum amount that can be availed is 1,50,000₹. This benefit can be availed once the construction is completed and the completion certificate produced.
No. 2- Section 80 EE: Section 80 EE of the income tax act allows the reclaiming of the interest on the home loan from any financial institution. One could claim benefits uptown 50,000 per year. However, there are eligibility criteria surrounding the law.
No. 3- Section 24 B: This section talks about the tax benefits that involve the interest taken on the home loan. The maximum benefits availed is 2 lakhs under this section. If the home is not self-occupied i.e. left for rental then there is no limit to the amount that can be claimed; the entire loan amount can be claimed.
No. 4- Section 54: section 54 of the income tax act provides the exemption of tax on the capital appreciation of the property when a person tries to sell the particular property. However, this is applicable only if the person buys another property with the money from the selling
No. 5- Deduction on registration and stamp duty: If you are a property buyer in India, you would have to pay 5-7 % of your property amount as a registration fee to the government. You would be doing the same for the stamp duty as well. This is done to get the Title of the home in your name. However, according to the income tax act of 1961, a homeowner could avail up to 1.5 lakhs if he abides by the conditions mentioned in the act.
No 6- Tax deductions for joint loans: If you are buying a property on a joint home loan, then each of the owners could avail the interest amount of up to 2 Lakhs each. This is applicable only if the homeowners have opted for the loan option.
The above-listed are some of the benefits a homeowner in India could gain from. There are a lot more similar tax laws that benefit the buyer.
Tips to help reduce tax while purchasing a home:
— It is wise to communicate with the buyer Nd come up with a wise decision in regards to the taxes. You might miss one of them initially that might end up as a burden towards the handover of the home.
— There is a huge difference between the taxes for ready-to-occupy and under-construction properties. It is important to analyze both and then examine the pros and cons before making a buying- decision.
— If your property is going to be a self-used one, then there are a number of taxes that could be availed from the government. Learn about these taxes, some of them are mentioned above.
— If you are a property owner and you are investing in another property for the rental returns, then there are several tax benefits that surround this particular area. You could avail the tax from the maintenance charges of the rental property, you could also avail taxes such as property tax, sewage tax, etc. for the rental property. You could also avail a certain amount of the rent money to carry out repairs and maintenance.
If you are purchasing a ready-to-move-in property then you need not pay the GST for the purchase of your home as of December 2018. This could save you a lot and allow you to compensate and purchase the luxury apartment in Chennai that you always wished to buy. You just have to pay the stamp duty and registration fee. Those could be availed later on.
All you have to keep in mind is that any extra amount saved could be used to invest in the property itself. So, however possible try to reduce or get a rebate on the tax money spent.