- Owning a home is a dream that every individual wants to realize. Luckily, thanks to various lending institutions, particularly NBFCs, buying a home with the help of a loan is no longer a time-consuming and complex option. Many NBFCs provide numerous home loan options suiting different requirements.
Why should you know about home loan incentives?
Home loan incentives are something that many people are not aware of. However, it should be noted that a reputed NBFC always promotes these incentives and helps the borrower to understand them. These are the schemes that the government proposes to aid the borrowers. You can avail multiple benefits ranging from tax savings to flexible repayment options through these incentives.
Do you know that Section 24B of the IT Act provides home loan tax benefits available to all the borrowers? It has multiple clauses that you can go through to help yourself better while applying for home loans.
Before we dive into the home loan incentives, let’s just look at what happened in the housing sector recently?
Home Loan Incentives – latest happenings
This year, finance minister Nirmala Sitharaman announced numerous incentives for the housing sector. One of the major highlights was the allocation of Rs.48,000 crores to the Pradhan Mantri Awas Yojana. Through the Awas Yojna, the government aims to provide affordable housing to all eligible citizens.
Other essential announcements included faster approvals for affordable housing in urban regions and the setting up of an expert panel to suggest other such incentives and their practical implementation. Incentives like these planned by the government help fast-track the infrastructural development and increase the ease of living standards for the commoners.
Now that you are aware of the latest happenings, is it time to understand the home loan incentives?
What are home loan incentives?
Home loan incentives are benefits that reduce the burden on the borrower when they want to buy their dream property. Following are a few things that you should know about home loan incentives:
- A home loan borrowed from reputed lenders is valid for tax benefits. . All you will need is a certificate from the NBFC. Save more money if you fall under the tax bracket through deductions. You can get money to purchase a house and save money to reduce your expenditure at the same time.
- An under-construction site is sometimes cheaper to book. However, the maximum a borrower can raise as a deduction every year is Rupees 2 lakh in the case of self-occupied property. Thus, many people opt for under-construction properties owing to the benefits.
- It is sensible to buy a new apartment with a co-applicant when you take a home loan. For example, apply with your spouse so that both of you are entitled to a deduction of Rupees 2 lakh on the interest. Co-Applicants help you reduce the burden, and the legislative schemes encourage co-applicants due to the range of tax benefits offered.
- The taxable income on your home loan will not include notional rent for your second self-occupied house property. Notional rent is the potential rent you might earn from your property even if you don’t receive it tangibly. This is only valid for up to two houses and not more than that. So for two years, you can save money, and the total loss from the property, which can be adjusted with any other income, has been fixed at Rs 2 lakh. Besides, if you cannot settle the home loan interest rate against any of the income heads, the surplus interest that could not be paid can be moved forward only for eight assessment years against ‘income from house property.
- The processing fee charged by the lenders is the amount for sanctioning and processing your loan. In some instances, the cost turns out to be a significant amount as the NBFCs charge some percentage of the loan amount. However, according to the ITA, this processing fee can be adjusted while paying your home loan’s interest, and you can claim a deduction for it.
Final thoughts
The government sanctions multiple home loan incentives every year to all applicants. If you are still unclear about what home loan incentives apply to your home loan application, consult experts before reaching a decision.
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