Do you plan to buy a new house as well? If you are, let us tell you about the number of benefits that you can redeem, if you’re thinking of taking a home loan. If you are looking for first time home buyer tax benefits, then you’re in the right space!
Here are some first home buyer benefits through which you can refer to while taking a home loan: If you are planning to buy a new home, a lot of benefits are waiting for you to be redeemed especially if you are taking a home loan. Save tax by the following means:
1- An extra deduction on home loan
Those people who intend to buy homes for the first time through home loans are allowed to take a tax exemption of Rs. 50,000 under section 80 EE of the Income Tax Act, 1961. Currently, somebody who wants to borrow a home loan by paying interest on the same can freely claim a deduction on interest from the gross income. One is allowed to deduct only Rs. 2,00,000 per annum under section 24 of the Income Tax Act, 1961. There is a catch to this as well. You are allowed to avail of this benefit only if the property is self-occupied. This too comes with some conditions:
- The home should have been sanctioned between a financial year i.e. 1st April- 31st March.
- An additional deduction can only be availed for interest on loan for a self-occupied residential property.
- The maximum additional tax credit for first time home buyers is Rs. 50,000
- If you are looking for first time home buyer benefits, the value shouldn’t exceed Rs. 50 lakhs and the loan amount shouldn’t exceed Rs. 35 lakhs.
2- Paid Interest? There’s a way to increase deduction claim time
Interest that is paid up to Rs. 2,00,000 is deductible from the gross total income while calculating the income from a self-occupied property. This is only applicable if the construction or acquisition of the house is completed within 5 years from the end of the financial year in which the loan for the residential property was taken.
3- Not getting HRA? Here’s a tax benefit
If you are buying a home for the first time, you can redeem benefits under section 80GG of the Income Tax Act, 1961. This gives you a deduction for any expense incurred by an individual in addition to 10% of his total income for the payment of house rent for a rather furnished or an unfurnished house/accommodation by him as his residence is not granted by his employer. The expenditure should not exceed Rs 2,000 p.m or 25% of his total income whichever is less.
Buying a home for the first time? It won’t be difficult now!