Home Loans Helping You Save on Tax

Everybody wants to be able to own his or her own home, and to decorate it in any way they please. In India, real estate is sky rocketing and prices are increasing everyday. You might have even found this perfect house, but it may be a little bit out of your budget. In such a case, taking out a loan to be able to pay for your dream house may be your only option. Today, luckily, there are certain tax benefits that come with taking out a home loan, making it simpler and cheaper to own your dream home.

Trying to find a house that you and your family members like is a very tiring and exhausting procedure. There are several houses to look at before anybody likes anything, and even after the house is picked, the price becomes an issue. A house that you want may be out of your budget. In such a case, a house loan would seem like a good option. However, many people are weary of taking out loans because of high interest rates. Luckily, in India, if you take out a housing loan, not only do you get 30 years to pay back the loan, you can also get certain tax benefits. Thirty years is generally more than enough time to pay back the principal amount, as well as whatever interest is required to the bank or financial institution.

The new budget has allowed for certain tax benefits if you have a home loan to pay off. In case your loan is for an amount less than 25 lakhs, it would be possible for you to get a maximum deduction of 1 lakh rupees. Unfortunately, this tax rebate is only applicable once the applicant has possession of the house. The stamp duty, and registration fee would also be allowed under the tax deduction, even if the final loan is not actually taken. While these talks about tax benefits based on the principal amount of the loan, tax benefits based on the interest rates of the loan is covered under a completely different section in the fiscal policy. In cases where the property is self-occupied, the maximum tax deduction allowed is one lakh fifty thousand only. On the other hand, if the property is not self-occupied, no limit has been set, and the taxpayer may be able to deduct the entire interest amount.

Knowing that being able to get tax deductions on your home loan may sway you in the direction of taking out such a loan, but what makes us eligible to do so? Housing loan eligibility depends on your age and your financial background. You are required to be between the age of 18 and 70. You should not have any defaults on any previous loans taken. Your loan will only be sanctioned once the financial institution has reviewed your income, the income of your spouse and your children if they are earning. If the flat is being purchased for the purpose of giving it out on rent, is another factor that will affect the amount of your loan. Taking out a home loan is definitely the easiest way to buy your dream house, and now, with the tax rebates, it has even become a very economical way to buy the home that you desire.