Why you should go for a home loan to purchase your dream house

If you are a taxpayer, then know that there are some very important reliefs made available by the government. These are in the form of tax benefits and are primarily given for two prime objectives. Firstly, encourage the home buyers to buy a home and fulfill their dream at an early stage. Secondly, encourage developers to create housing stock in the affordable housing segment.

Tax benefits help boost the demand and supply in the housing sector of the country. Home seekers get the benefit of tax rebate and builders get the benefit to investors in affordable housing.

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A home loan borrower can save tax by availing benefits of deduction from income towards interest payment made up to Rs 3.5 Lakh every year.  The interest deduction is available for an amount of Rs 2 Lakh to all home buyers and additional Rs 1.5 Lakh if an individual is not having any other home and purchase cost of the home is up to Rs 45 Lakh.

In addition to interest one can save on principal repayment too; to the extent of Rs. 1.5 Lakh under section 80C of Income Tax Act, 1961 every year. In the year of purchase deduction of Rs 1.5 Lakh will cover stamp duty and registration cost incurred towards the purchase of a home.

These deductions are allowed from the gross total income before calculation of tax, thereby reducing the total tax payable.

One can plan by purchasing home in joint ownership and have a similar deduction for each participating member.

Builders also get tax holiday on affordable housing projects approved till March 2021.

These tax benefits inspire a home buyer to purchase their own home, as it creates an asset for individuals to invest in. One of the most stable investment one can make is certainly own property.

(Authored by Deo Shankar Tripathi, MD & CEO at Aadhar Housing Finance Limited)