Instead of buying a home, why not build a home exactly as per your specifications? You can design each room to your liking instead of settling for less. To put your plans into action, you can make use of a home construction loan. Unlike regular home loans, you can access funds from the total sanctioned amount in phases when taking a home construction loan. It is typically based on your construction requirements and progress.
When you take a Home Construction Loan from Bajaj Finserv, you only have to pay interest on the funds you use, not the entire loan amount. Besides, if you meet all the eligibility criteria, Bajaj Finserv approves your application within minutes. Apart from ease of use and flexible repayment terms, this home loan variant also offers you home loan tax rebates that can help you save more.
Here are the sections under which you can enjoy home loan tax benefits.
You can claim deductions on the interest you pay on your home loan under Section 24 of the Income Tax Act. A maximum deduction of Rs. 2 lakh is allowed in the case of a self-occupied property. However, you can claim this deduction only if the construction of your home completes within 5 years from the time you take the loan. If not, then you can claim only Rs. 30,000. If you are not occupying the property for which you have taken the loan, there is no limit on the amount you can claim as exemption under this section, regardless of completion status.
Additional Read: How do a Home Construction Loan work
Also, even if you pay interest on the home loan while construction is underway, you can claim exemptions only after the construction of the house is complete. You can do so in 5 equal installments in consecutive years.
You can claim exemption on the principal amount of your home loan under section 80CX. Here you can benefit from a tax deduction of up to Rs. 1.5 lakh. But, you can avail this benefit only after the construction of the property is complete. Also, if you sell the property within 5 years of possession, the benefit will get reversed. The amount you claimed will be added back to your income in the year you make the sale.
You can claim an additional deduction of Rs. 50,000 per financial year towards interest payments if you are a first-time homebuyer. You can claim this benefit under Section 80EE of the Income Tax Act. In this case, the total value of the home loan must be under Rs. 35 lakh and the home’s value must be under Rs. 50 lakh. Besides, you can avail this deduction over and above the benefits that other sections offer.
Also, if you are thinking about tax planning, consider taking the home loan jointly, as this way both of you can claim home construction loan tax benefits. The only thing to remember is that your co-applicant must be a co-owner too. So, plan and reap the rewards that your home loan has to offer!
Additional Read: Benefit of Co Applicant in Home Loan
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