Buying a property is one of the key decisions of one's life and almost just about every body who takes a house loan has to go to a bank or financial institution to obtain his house financed. The funds involved in a household loan is often a rather large sum. Government of India has given some tax benefits on house loan in India to decrease the burden of acquiring a house in India. Here are 5 vital facts about these tax advantages.
- 1.Both interest and principal components of home loan attract tax rewards. Persons who've taken a loan to purchase a home or for construction can claim these deductions under the section 24(b) of the Income Tax Act.
- The deduction on interest component on home loan is accessible up to Rs. 1.5 lakhs if the loan was taken on or right after April 1, 1999 to purchase or create a property. The obtain or construction ought to be completed inside 3 years from the end of the financial year in which the loan was taken. In addition to it a certification from the lending banks is needed to certify that interest is payable against the loan advanced to purchase or construct a home.
- These deductions are only obtainable should you continue to make payments. If a borrower fails to create EMI payments on time, he can't claim tax benefits on the quantity supposed to have been paid.
- If a person buys a home and sells it inside the very same year or prior to three years, he is liable to pay short term capital gains tax. But, if the sale had taken place soon after three years, he is liable to pay long term capital gains tax. Long-term capital gains are exempt from tax if the profit amounts are invested in capital gains tax-saving bonds as detailed under Section 54.
- Only a person who has taken a home loan can claim tax deductions. If you'll find co-borrowers of the home loan, the deduction they can claim is limited to the extent to the part of the loan they repay.
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