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If you are planning to buy a new house, there are a number of benefits which you can avail, especially if you are taking a home loan for the purchase. These first time home buyer benefits can be availed in the form of tax benefits. With that said, here are some tax benefits of buying a house for the first time: If you are planning to buy a new house, there are a number of benefits which you can avail, especially if you are taking a home loan for the purchase. These first time home buyer benefits can be availed in the form of tax benefits. With that said, here are some tax benefits of buying a house for the first time:
1. Extra deduction on home loan
Those buying a house for the first time by availing home loans are allowed to take tax benefits of up to Rs. 50,000 under Section 80 EE of the Income Tax Act, 1961. Right now, a home loan borrower paying interest on the home loan can claim a deduction on interest from his/her gross total income. The maximum deduction allowed is 2 lakh per annum under Section 24. But this deduction can only be availed if the property is self-occupied. *The deduction of Rs 50, 000 under Section 80 EE is over and above the limit of Rs 2 Lakh. Here are some conditions needed to be fulfilled to avail the benefit: –
• Additional deduction available only for interest on loan taken for residential self-occupied house property.
• The benefit is for first time home buyers• The maximum additional benefit is capped at Rs. 50, 000 a year
• The value of the house shouldn’t exceed Rs. 50 Lakh• The loan amount shouldn’t exceed Rs. 35 Lakh
• The home loan should have been sanctioned between April 1st, 2016 and March 31st, 2017
2. Increase in period for claiming deduction of interest paid
Interest paid up to Rs. 2 Lakh is deductible from the gross total income while computing income from self-occupied house property. This is however only applicable in cases where the acquisition or construction of the house gets completed within five years from the end of financial year in which the home loan was taken.
3. Tax Benefit for those not getting HRA
If you are buying a house for the first time, you can avail benefit under Section 80GG of the Income Tax Act, 1961. This provides for deduction of any expenditure incurred by an individual, in excess of 10 per cent of his total income for rent payment, for a furnished/unfurnished accommodation by him as his residence if he is not granted HRA by his employer. *The excess expenditure must not exceed Rs 2,000 per month or 25 per cent of his total income for the year, whichever is less.
4. Pradhan Mantri Awas Yojana
First time home buyers from Economically Weaker Sections (EWS), Lower Income Group (LIG) and Middle Income Group (MIG) can avail the tax subsidy offered on home loans under Pradhan Mantri Awas Yojana. Here are some parameters for first time home buyers benefits under Pradhan Mantri Awas Yojana:
Loan to be granted
• EWS – Not more than 6 lakhs
• LIG – Not more than 9 lakhs• MIG – not more than 12 lakhs
Who is eligible?
Those buying home for the first time matching the income criteria below:
• EWS – Annual income below 3 lakhs per annum
• LIG – Annual income not more than 6 lakhs per annum
• MIG – Not more than 12 lakhs per annum
• EWS – 6.5 % on interest• LIG – 4 % on interest• MIG – 3 % on interest
To maximize your benefits as first time home buyers, just ensure that you keep the aforementioned points in mind.
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