Investments always seem to be a headache, until you realise the benefits of investing. The end of the financial year is a time that all of us retrospect on our investments and whether we have made it right. Well, every investment is a positive one if done in the right way.
The Government has played a fine role in throwing at consumers several investment benefits when it comes to purchasing real estate. Real estate is booming in India and the cost of investing in this can often be labelled as unaffordable. Before you invest in a property, always ask yourself what will be the financial implication on you or your family. The tax benefits that one receives are according to the property type, nature of construction and the home loan amount.
An individual avails of these benefits under three very important sections 80C, 24B and 80EE of the Income Tax Act 1961. Real Estate Developers in Goa and around the country are well aware of the benefits for every consumer and directly or indirectly persuade you to avail of these benefits. Your hard-earned money must be invested wisely, the luxury of homes comes with a price and the sections listed below will justify why your dream home will not always be unaffordable.
Under Section 80C, an individual home buyer can avail tax deduction on the amount that he pays for repayment of the principal amount of the home loan. The maximum amount that he can presently claim for is capped at Rs. 1.5 lakh. It is important to note that, this can be availed only upon completion of the construction and when the completion certificate is received by the taxpayer. If a loan is taken for extension and renovation of the property, deductions can be claimed on interest paid towards these loans; this too after completion of construction.
Under Section 24B, a deduction on interest amount can be claimed apart from principal amount. The maximum limit for a self-occupied property is Rs. 2 lakh. There is no limit if the property is not self-occupied or is rented out. In this case, the whole loan amount can be claimed for deduction. It is very important to note that this loan can be taken only for construction, reconstruction, repair or purchase of a residential property. Also, the construction needs to be carried out within 5 years from the end of the financial year from where it was taken; else the deduction that is allowed will be reduced from Rs. 2 lakh to 30,000. Section 80EE is a big cheer to first time home buyers. This provision allows first-time homebuyers to avail an additional tax benefit of Rs 50,000 above what is granted under sections 80C and 24B. However, this loan has a limitation and could be availed only between 01.04.2016 to 31.03.2017. For those of you who have not availed benefits under this, the union budget 2019 has come up with Section 80EEA, which gives tax benefits of up to Rs 1,50,000 for a first-time buyer and someone who has not claimed benefits under Section 80EE.
