This has been a year of joy for home buyers. More tax
benefits, interest rate cuts on loans, sluggish property prices, new launches
in the 'affordable' segment with freebies and attractive payment schemes.
A lot many people would be looking to take advantage of
these benefits and buy their home sweet home. In the midst of this, it makes
sense that you would try to get a good deal on your home loan as well. However,
even if you get a discount, the taxes are sure to burn a hole in your pocket.
Here we give you a list of lesser known tax benefits on home loans.
You can claim tax
benefit on interest paid even if you missed an EMI- In case you have missed
a few EMIs during a financial year, you would still be entitled to claim
deduction on the interest part of the EMI for the entire year.
Processing fee is tax
deductible- Charges related to loans are tax deductible, according to the
law, these charges are considered as interest and therefore you can claim deduction
on the same.
Principal repayment tax benefit is reversed if you sell
before 5 years- If you sell your
house within five years of purchase then it can have a negative impact. Any
deduction claimed under the principal repayment category would be reversed and
added to your annual taxable income in the year of sale.
Loans from relatives and friends is eligible for tax
deduction- If you avail of a loan
from a friend or family member, you can claim deduction on interest repayment, provided
that the loan was used for construction or purchase and the requisite documentation
is provided. This rule is applicable only for interest repayment.
You may not be eligible for tax break even if you are
just a co-borrower- You cannot
claim tax benefit if you are not the owner of the property. You would need to
be both owner and borrower to be entitled to any sort of tax breaks.
You can claim pre-construction period interest for up to
5 years- Your home loan benefits
start kicking in after you get possession. While you cannot claim principal
repayment, you can claim the interest paid post possession
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