Festive season generally coincides with developers and banks offering many beneficial schemes for home buyer. So if you are anyway planning to buy a house, this festive season is best time to go for it. In addition to the regular tax benefits which you anyway get on home loans under the tax laws, you can avail various offers from developers on house purchase and from the lenders on home loan. Let us discuss.
Offers by developers
The pandemic has hugely affected the sentiments and purchasing power of general public resulting in lower offtake of home inventory. In order to bring the buyer to the market the developers are offering various discounts, freebies and flexible payment plans for under construction property as well as for ready to move in properties. The nature of offers varies from free car to free parking. Some developers are offering waiver of stamp duty and GST charges. Some developers are offering freebies like gold coins. So this season has offers galore for the prospective home buyers. Some developer are in fact offering reduced rates of properties to clear the inventory during this festive season. I feel this festive season is the right time to implement your decision to buy your dream house.
Offers by lenders
Due to abundant liquidity in the market the lenders are offering home loans at unprecedented cheap rates. The lenders have come out with special schemes for this festive season. For example, Kotak Bank has reduced it home loan rate to 6.5% probably the lowest rate offered in the market across all loan amounts, fresh loans, and balance transfer cases from September 10 to November 8. I distinctly remember having taken a home loan in 2004 for around 16.50% annual rate of interest. Moreover, the lenders are either reducing the processing fee substantially or altogether waiving it. The borrowers never had such good times. Looking at the lowest rates being offered in the market is one more reason for you to go you your dream house.
Regular income tax benefits
In addition to the festive offers which you can avail during the season, you also get regular tax benefits under the income tax laws for buying a house for a home loan. You can claim a deduction for upto Rs. 1.50 lakh under Section 80 C, in respect of repayment of principal amount of home loan, taken from specified entities, for a residential house property along with other eligible items like contribution towards Provident Fund and Public Provident Fund account, tuition fee, life insurance premium, ELSS etc. from the year in which you take possession of the property.
In addition to repayment of your home loan, you also get a deduction for money borrowed for any property from the year in which you take the possession under Section 24(b). The amount of deduction available is restricted to Rs. 2 lakhs for maximum of two self-occupied properties taken together. In case the property is let out, you can claim full deduction of interest against the rental income but the loss under the house property head which you can set off against your other incomes during the current year is restricted to Rs. 2 lakhs and the loss not so adjusted is allowed to be carried forward for set off against house property in eight subsequent years.
In case you are going for an under construction property, and paying interest during the construction period, you get deduction in respect of aggregate of interest paid during construction period in five equal installments beginning from the year of possession within the overall limits mentioned above.
Additionally, under Section 80EEA you can claim addition benefit in respect of home loan upto Rs. 1.50 lakhs for a property purchased, stamp duty value of which does not exceed Rs. 45 lakhs and you do not own any other residential house on the date of sanction of the home loan, provided the home loan is taken from specified institutions. This deduction is available if the home loan has been sanctioned between 1st April 2019 and 31st March 2021. Please note that this deduction can be claimed even during the construction period which is not available under Section 24(b).
So go and take home loan to buy your dream house and encash the festive offers.
Balwant Jain is a tax and investment expert and can be reached on jainabalwant@gmail.com and @jainbalwant on twitter.
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