Additional Tax Benefit for first time Home Buyer

If you are planning for buying your 1st house in this financial year you can claim extra benefit on your home loan. First time individual home buyers can get tax deduction on interest of home loan, under newly inserted section 80EE of the Income Tax Act, applicable for assessment year 2014-15. This is in addition to tax rebate on interest payment of home loan, under section 24. Now you can claim total Interest deduction of Rs. 2.50 lakhs on your first self-occupied property.

Eligibility for 80EE rebate:

This rebate on home loan interest is applicable only for home loans satisfying the following conditions:

1. Loan has been sanctioned for house by any financial institutions from 01 April, 2013 to 31 March, 2014.

2. Loan amount sanctioned for acquisitions house property does not exceed 25 Lacs.

3. There are no other house property on the date of sanction housing loan to assessee.

4. Value of house property not exceed of Rs. 40 lacs.

5. Buyer of house property is the first time buyer.

The amount claimed under 80EE cannot be claimed for tax rebate under any other sections in any year.

How to get 80EE tax benefit:

You can either produce certificate from your lender to the HR or get deduction on salary TDS or you can deduct the amount from total income while filing income tax return.

Your home can reduce your tax burden too

Your home can is not your shelter only it can reduce your tax burden too. There is only 3 months of time to end of this Financial year, it is time to start planning your tax saving strategies. Your house can also be used to reduce the tax liability to a some extent. Under Section 24 of the Income Tax Act, interest paid up to Rs 1.5 lakhs per annnum on a home loan & can be set-off from salary or business income, for a self-occupied property. Further if you have got your house rented than there is no limit on Interest paid, you can claim the actual interest paid, no matter what is the Rent amount. The interest amount is eligible for deduction even if you took the loan for reconstruction / renewal/ repair of your house.

Loan for construction eligible for deduction

A loan availed for the construction of a residential property, purchase of a residential property, extension of an existing house, and major repairs and renovation of a house are eligible for tax benefits. Under Section 80C of the Income Tax Act, a home loan borrower can claim a deduction of up to Rs 1 lakh from his taxable income on repayment during the year along with specified savings instruments like provident fund.

All co-owners eligible for deduction

In case there are co-owners to a property, each of them can claim tax benefits separately , in proportion to their share holding in the property. If the share holding is not mentioned in the purchase deed, they can execute an agreement on a stamp paper, mentioning the shares in the property, and claim tax benefits separately . Co-owners can thus claim a deduction of up to Rs 1.5 lakhs per annum separately, on interest paid towards a self-occupied house, and also up to Rs 1 lakh per annum towards principal amount repaid.

Pre-EMI qualifies for benefit

The entire pre-EMI interest amount (the interest paid during the construction period ) is allowed as a deduction under Section 24 of the Income Tax Act equally over five years (20 percent of total interest paid per annum), starting from the year in which the construction is completed.

However, if one avails a loan only for a land purchase, he is not eligible for any tax benefits. In the case of a composite loan (for land and construction ) and the house construction is completed within three years, only after completion of the construction will one be eligible for the tax benefits.

Interest Rate Chart of LICHFL Till 31.03.2013

Interest Rate Chart for Retail Loans
Scheme	Limit	Rate of Interest	Validity
Bhagya Laxmi	For Loan upto Rs. 75 Lacs	10.00%	31.03.2013
	For Loan of Rs. 75 Lacs & above upto Rs. 1.50 Crs	10.50%
Super Choice	For Loan upto Rs. 75 Lacs	10.25%	31.03.2013
	For Loan of Rs. 75 Lacs & above upto Rs. 1.50 Crs	10.75%
Grand 3	For Loan Amount upto & including Rs 40 Lacs	10.70%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.00%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.80%
New Advantage 5	For Loan Amount upto & including Rs 40 Lacs	11.15%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.40%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.65%
Pure Fixed	For Loan Amount upto & including Rs 40 Lacs	10.95%	31.03.2013
	For Loan Amount more than Rs 40 Lacs and less than Rs. 1 Crore	11.20%
	For Loan Amount more than Rs 1 Crore and upto Rs. 1.50 Crore	11.50%