A first-time home-buyer often goes through mixed feelings. On one hand, there’s the euphoria of owning a home for the first time ever! On the other, it’s about preparing to sail smoothly through the biggest financial commitment of your life. It’s only natural to experience both and this is what makes owning a home a memorable journey.
Even though home-buying is a big financial decision, there’s some relief and it comes in the form of Tax Benefits, especially for a first time home-buyer. Surprisingly, people are oblivious to these benefits that can be availed in the form of tax rebates, and simply lose out on an opportunity.
If you are a first-time home-buyer, and if you are planning to own an apartment in Bangalore or a villa in Bangalore, make sure you get to the depths of the tax benefits before making an investment. Because quite honestly, a lot of time and energy is spent only choosing the builder, finalising the location, working out on the budget, and not really understanding the multiple possibilities and options of saving tax. Both of which are equally important.
While a financial advisor can offer the best advice and offer help on tax saving, here are a few points you might want to know about tax saving before you take the plunge and give your family the biggest gift of their life.
Under this section, the repayment of the principal amount of a home Loan is allowed for a tax deduction. However, it is important to understand that the tax benefit is allowed only after completion of the construction of the project and the completion certificate received by the taxpayer. The deduction for interest payment on the home loan, under this section, is allowed if the loan is sought for the extension and renovation of a house, but only after the construction is complete.
This section allows you tax benefits on interest paid for the home loan. With a maximum benefit of Rs. 2 lakhs, 24B offers the required relief from a tax benefit perspective for the homeowner. The section states that the benefits can be availed if a home loan is taken for construction, reconstruction, repair, renewal or purchase of a residential property. However, if the property is not constructed within five years from the end of the financial year in which the home loan was availed of, the interest benefit will be reduced from Rs 2 lakh to Rs 30,000.
Section 80 EE
This section covers income tax rebate on interest on home loan for ‘first-time buyers’, and provides an additional deduction of Rs 50,000 over and above the tax deduction of Rs 2 lakh under section 24 and Rs 1.5 lakh under section 80C.
Tax benefits and rebates depend on many factors. The above points are just a few of the many benefits one can avail. Which is why it’s always best to consult a financial advisor who can help you weigh the pros and cons of your investment before giving you the best possible solution. Thereby ensuring that you make the most of every tax benefit offered to you and save money.
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