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