Skip to main content

Home Loan Tax Benefits

 
You are aware of the basic tax exemptions on home loans, but there are more ways a home buyer can benefit.
 
The year 2016 is turning out to be one of the best for home buyers, with more tax benefits, interest rate cuts, stagnant property prices and new launches in the affordable segment. Many of you may be looking to take advantage of these benefits and buy a house. While hunting for a house at the right price, you'll be haggling with the bank to cut a loan deal too. Even if you get a discount on both, your tax bill can cost you dear, unless you know the rules well. Everyone knows the basics--you can claim up to `1. 5 lakh for repayment of principal under Sec 80C and up to `2 lakh under Sec 24 for interest payment. Here is a list of lesser-known and often missed tax benefits on home loans.

1 You can claim tax benefit on interest paid even if you missed the EMI. Unlike the deduction on property taxes or principal repayment of home loans, which are available on `paid' basis, the deduction on interest is on accrual basis. Even if you have missed a few EMIs during a financial year, you would still be eligible to claim deduction on the interest part of the EMI for the entire year. However, retain the documents showing the deduction so that you can substantiate if questioned by tax authorities.

2 Most taxpayers are unaware that charges related to their loan qualify for tax deduction. These charges are considered interest, and therefore, deduction can be claimed on the same. Moreover, there is a tribunal judgement which held that processing fee is linked to services rendered by the bank in relation to the loan granted, and is thus covered under service fee. Therefore, it is eligible for deduction under Section 24 against income from house property. However, any penal charges such as those for missing an EMI or late repayment, would not be eligible for deduction.

3 You score negative tax points if you sell a house within five years from the date of purchase, or five years from the date of taking the home loan. Any deduction claimed under Section 80C in respect to principal repayment of housing loan would get reversed and added to your annual taxable income for the year in which the property is sold, and you will be taxed at current. Thankfully, the loan amortisation tables are such that the repayment schedule is interest heavy and the tax-reversal rule only applies to Section 80C. You can still hold on to the tax benefits you claimed under Section 24 for interest payment.

4 Loans taken from relatives and friends are eligible for tax deduction. You can claim a deduction under Section 24 for interest repayment on loans taken from anyone, provided the purpose of the loan is to purchase or construct a property. You can also claim deduction for money borrowed from individuals for reconstruction and repair of property. It does not have to be from a bank.The lender must also file an income-tax return reporting the interest income and paying tax on it. This rule, however, is only applicable for interest repayment. You will lose all tax benefits for principal repayment under Sec 80C if you do not borrow from a bank or employer. Additional benefit of `50,000 under Sec 80EE is also not available if you borrow from individuals.

5 You can claim pre-construction period inter est for up to five years. You know you can start claiming your home loan benefits once the construction is complete and you get possession. But what happens to the instalments you paid during the construction or before you got the keys? As per the rules, you cannot claim principal repayment but interest paid during the period can be accrued and claimed post-possession. The law allows deferred deduction on interest payable during the pre-construction period. The deduction is available equally over a period of five years, starting from the year of possession

-----------------------------------------------
Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds

Top 10 Tax Saver Mutual Funds to invest in India for 2016

Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. Franklin India TaxShield

4. ICICI Prudential Long Term Equity Fund

5. IDFC Tax Advantage (ELSS) Fund

6. Birla Sun Life Tax Relief 96

7. DSP BlackRock Tax Saver Fund

8. Reliance Tax Saver (ELSS) Fund

9. Religare Tax Plan

10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

-----------------------------------------------

Popular posts from this blog

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...

Zero Coupon Bonds or discount bond or deep discount bond

A ZERO-COUPON bond (also called a discount bond or deep discount bond ) is a bond bought at a price lower than its face value with the face value repaid at the time of maturity.   There is no coupon or interim payments, hence the term zero-coupon bond. Investors earn return from the compounded interest all paid at maturity plus the difference between the discounted price of the bond and its par (or redemption) value. In contrast, an investor who has a regular bond receives income from coupon payments, which are usually made semi-annually. The investor also receives the principal or face value of the investment when the bond matures. Zero-coupon bonds may be long or short-term investments.   Long term zero coupon maturity dates typically start at 10 years. The bonds can be held until maturity or sold on secondary bond markets.

NFO Review: Edelweiss Select Midcap Fund

      Edelweiss Mutual Fund has announced the launch of another equity fund after a gap of nearly two years. This fund will be focused on mid cap stocks.   Investment Strategy The primary investment objective of the scheme is to generate long term capital appreciation from a portfolio predominantly comprising of equity and equity related securities of mid cap companies. The scheme may invest upto 100% in equity and equity related securities of companies falling in top 101 to 300 companies by market capitalization. However, it may also invest upto 20% in other listed companies as well as in debt and money market instruments.   Fund Manager Mr. Paul Parampreet and Mr. Nandik Mallik will co-manage the scheme. Mr. Paul Parampreet has done PGDM (IIM – Calcutta) and B.Tech (IIT-Kharagpur). With overall experience of 6 years, he has worked with Edelweiss Securities Ltd. SDG India Pvt. Ltd. ICICI Bank and BG India Pvt. Ltd. Mr. Nandik Malik has done MS-Finance (London Business Schoo...

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...

DSP BlackRock US Flexible Equity Fund - New DSP BlackRock Fund

  DSP BlackRock US Flexible Equity Fund is a feeder fund which will give Indian investors access to US equities by   predominantly investing in the BlackRock Global Funds–US Flexible Equity Fund (BGF - USFEF). BGF - USFEF invests at least 70% of its total assets in the equity securities of companies having economic activity in the US.BGF - USFEF normally invests in securities that, in the opinion of the Investment Adviser, exhibit either growth or value investment characteristics, placing an emphasis as the market outlook warrants. BGF – USFEF's investment strategy is based on the belief that incorporating growth/momentum and valuation factors with disciplined security selection and portfolio construction will provide consistent and repeatable investment success.   Why should one invest in this Scheme?   By investing in DSP BlackRock US Flexible*Equity Fund, investors can get access to: The world's largest country by GDP at USD 15.1 trillion^ ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now