For a first time home buyer, an additional deduction if Rs 50,000 can be availed on home loans apart from the Rs 2 lakh deduction that exists.  The additional benefit will help individuals taking loan during April1, 2016 – 31 March 2017, provided the value of the loan does not exceed Rs 50 lakh.

It may be cheaper to book an under construction apartment to enable one to claim the interest paid during pre-delivery period. The claimable amount will be Rs 2 lakh for loan taken before April 2016 and Rs 2.5 lakhs for loans disbursed after 1 April 2016.

The in event one is transferred from his base city to another city, his own property is considered as self-occupied and is eligible for deduction in housing loan interest. Also opting to purchase a second home is a tier 2 town, while staying in a rented house also makes the buyer eligible for deduction in housing loan.

Self-occupied property is considered non income yielding and hence considered a loss, which can be set off against any other income including salary, reducing tax liability. The loss can be carried forward for 8 years, but in subsequent years can be set off only against income from house property.

Here again, loans taken jointly by the husband and wife to purchase property, entitles each to a deduction of Rs 2 lakh to Rs 2.5 lakhs. Similar is the case if there are 3 joint owners, subject to given conditions.

Repayment of principal of housing loan is allowed as deduction from gross total income subject to overall cap with other eligible investments of Rs 1.5 lakhs, provided the loan is from approved banks or LIC.

More on this in our next blog….