Home loan: 4 things you might not be aware about
Home loan is an important source of finance for buying a home. You should ensure that you can afford the loan as well as are in a state to repay it. If you are not, it may lead to poor or bad credit history. Here are some hidden facts which should be considered while getting a home loan;
Tax deductions for an under construction home:
Most of the home loan seekers believe that they can claim tax benefits for an under construction home and without being completely aware about the facts, they seek the home loan. However, they should be clearly informed that claiming tax in case of under-construction house is different. One cannot claim the tax benefits for the principal amount for an under-construction home. In order to avail that, one has to have the possession and certificate of ownership under Section 80C. Also one cannot claim the interest amount until he/she gets the possession of the home. One can always claim the deductions later in 5 equal installments for the next 5 yrs from the end of financial year of possession.
The tax saved earlier will be reversed in case you sell the home before 5 years:
Most of them fret about saving tax every year, perhaps saving tax every year does not end there. The tax benefit for the home loans under Section 80C will be allowed only on a condition that the property shouldn’t be sold before 5 years from the date of purchase. In case the home is sold before 5 years all the money saved as tax will be deemed in the income in the year of sale.
The loan taken from family/friends will be eligible for deductions:
If you have taken a loan from your near and dear ones, you can claim interest on the loan under Section 24 which comes up to 1.5 lacs in a year. However, one cannot claim the principal amount under the section 80C but can claim if the loan is taken from some bank or a financial institution.
In case of a loan for the extension/renovation of the home under Section 80C:
If a person has taken a loan for the extension or renovation of the existing home, they cannot claim the principal amount under section 80C. They can only claim the interest amount under the Section 24 up to a limit of Rs. 30,000 for self-occupied properties. Similarly, for homes which are rented, there is no tax deduction limit.
