The advantage of acquiring a home loan either for buying an apartment /house or for building a house is that it makes one eligible for tax rebates under the Income Tax Act. Home loans taken for repairs, renewal or reconstruction of an existing residential property also come under tax rebate eligibility. The interest rates for home loans are much lower in comparison to other loans as they are subsidized by the government.
Though there are benefits in the form of tax rebates in getting a home loan, one should qualify for such benefit. The Income Tax department has laid down certain terms and conditions for availing tax benefits on home loans.
The loan applicant is the only person who is eligible to claim tax rebates.
The acquisition of the apartment or construction of the house should be completed within 3 years from the end of the financial year in which the money was borrowed.
To claim tax deductions, the upper limit on housing loan interest payments should be Rs. 1.5 lakhs for a financial year.
Tax rebate is applicable for a principal repayment of Rs.1 lakh on the home loan in a financial year subject to fulfillment of prescribed conditions.
Tax benefits are not available for loan repayments in a financial year if the construction of the property is incomplete. The benefits can be claimed only after the construction of the residential property is complete.
The benefit of tax deduction will not apply if the loan is availed for buying land.
If the loan is availed for repairing a house or flat, tax deduction of Rs. 30,000 is allowed.
Both husband and wife are eligible for tax deductions to the extent of loan availed in their respective names, if they are tax payers with independent income sources. It could be said that the tax benefits that come along with home loans are more appealing than being a burden.
Both husband and wife are eligible for tax deductions to the extent of loan availed in their respective names, if they are tax payers with independent income sources. It could be said that the tax benefits that come along with home loans are more appealing than being a burden.