Would you like to take advantage of tax benefits on affordable housing? You are short on time to get a home loan sanctioned

If a home buyer meets the conditions u/s 80EEA, he can get a deduction of up to Rs 3.5 lakh (Rs 2 lakh u/s 24 and Rs 1.5 lakh u/s 80EEA) on interest paid on a home loan.

Apart from getting deduction up to Rs 2 lakh from the taxable income under Section 24 of the Income Tax Act, buyers of affordable housing are eligible for the additional tax deduction of Rs 1.5 lakh under Section 80 EEA – provided that the value of the house property should not exceed Rs 45 lakh and the carpet area of ​​the house should not exceed 60 square meters (645 sq ft) in metropolitan cities Bengaluru, Chennai, Delhi NCR (limited to Delhi, Noida , Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (the entire Mumbai metropolitan region), while in other cities or towns the carpet area should not exceed 90 square meters (968 sq ft).

So if the conditions u/s 80EEA are met, a home buyer can get a deduction of up to Rs 3.5 lakh (Rs 2 lakh u/s 24 and Rs 1.5 lakh u/s 80EEA) on interest paid on a home loan. However, unless further extended, the benefit can only be used on the home loans sanctioned on or before March 31, 2022.

“So from the beginning of April 1, 2022, buyers would no longer be eligible for the additional tax benefit of Rs 1.5 lakh under Section 80 EEA of the Income Tax Act, 1960, which is currently available for affordable housing. So if you are looking for a home that meets the requirements of Sec 80 EEA for eligibility, it is a good idea to have your home loan approved before the deadline on March 31, and then wait for the payout, said Pramod Kathuria – founder and CEO, Easiloan.

“There are several articles of the Income Tax Act that allow a home buyer to save tax on interest and/or principal. In some ways, this is a government gesture to facilitate home buying and ease the burden on the borrower,” he added.

According to Kathuria, some of the tax-saving provisions are:

  • Tax credit on principal under 80C (up to Rs 150,000 and tax deduction under Section 24(b) on interest paid (up to Rs 2 lakh for owner-occupied home and the full amount discounted for rented property).
  • Deductions are also available under Sections 80 EE and 80EEA, which have been in effect for the past several years.
  • 80EE allows an additional deduction of Rs 50,000 on top of Section 24(b) for home loans sanctioned during FY 2016-17.

“80EEA and one of my favorites as it allows instant affordable housing – an additional deduction of Rs 150,000 on top of Section 24(b). This applies to first-time buyers with a transaction value of less than Rs 45 lakh It also can’t be clubbed with 80E As you can see it’s a huge benefit and clearly defined to support the buyer of a first affordable home, so a nice move that started in Budget 2019 and has been extended every year since. Importantly, this also applies to properties under construction, as opposed to section 24(b), which was intended for those whose property has been received,” Kathuria said.

“Now the central government will not extend this sop beyond March 31, 2022. Therefore, my advice to potential home buyers (among affordable housing) is that if you are confident of buying a home in the next FY (FY 2022-23), go than before the end of this financial year (before March 31, 2022) for a sanction for a home loan. This sanction allows you to take advantage of benefits under Section 80EE A and for the entire term of your home loan. You can also go for payout anytime until March 31, 2023,” he added.

“This is a good hack to make sure you don’t miss out on this advantage. Of course, the usual conditions under 80 EE A apply as mentioned earlier. Also, in my opinion, sanctioning a home loan before closing the house is always a good move – it shows you are a serious buyer and gives you bargaining leverage,” Kathuria said, adding: “Even if you already have locked on that dream house, you have to go before March 31, 2022 for the closing of the housing loan sanction.”

“In case you are away from the whole house buying and mortgage application for some time, don’t worry about missing this opportunity. There are 80EE and other sections as mentioned before. Affordable housing is also a priority for our government, so always be optimistic about a new benefit to start in the future,” suggested Kathuria.

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