Apart from selecting house and arranging money, savings taxes is also a big factor, which provides great relief to home buyers during purchase of a house and repayment of home loan.

Buying a house is a dream that almost everybody harnesses. But purchasing a house needs lots of efforts and searches starting from choosing the location and the property within budget to arranging money for down payment to procuring a home loan at the cheapest interest rate.

Apart from these, savings taxes is also a big factor, which provides great relief to home buyers during purchase of a house and repayment of a home loan. As per the current provisions of Income Tax Act, an individual may claim deduction up to Rs 2 lakh for payment of interest on home loan and deductions up to Rs 1.5 lakh u/s 80C for repayment of the principal amount of the loan taken for acquiring house for self occupation. So, a single buyer may avail deductions up to Rs 3.5 lakh per year and earning couples as a joint buyer may save up to Rs 7 lakh per financial year during the loan repayment period.

So, an earning couple in 30 per cent tax bracket may jointly save income tax up to Rs 2,10,000 in a financial year, apart from applicable cess and surcharge, if any. However, taxes may be saved only if the construction of the house is completed within 5 years from the end of financial year in which loan was taken. So, while choosing an under-construction property, you must be sure that the developer completes the construction on time and gets the completion certificate within 5 years from approval of your home loan, to avail the tax benefits. However, if you purchase a ready-to-move-in property, you will not face any such risks.

Apart from income tax benefits, another tax which affects the cost of property is the Goods and Services Tax (GST). As per the current provisions, apart from ready-to-move-in properties having completion certificates, 8 per cent GST is charged on other under-construction properties.

Not only risk-free on the point of view of income tax, but buying a ready-to-move-in property with completion certificate will also help you cut the cost by way of saving on GST. So, to maximise tax benefits, you should go for a house, in which you may shift immediately.

Further, women home buyers would get additional benefits of paying lesser stamp duty as most states charge lower stamp duty from women than their male counterparts.


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