Home Loan

Tax Benefits

Buying your first house on a loan comes with multiple tax benefits. These deductions not only reduce your tax outgo but also help in managing your cash flows better.

In the case of self-occupied property acquired or constructed out of borrowed funds, the deduction available for interest on capital borrowed is Rs. 2,00,000/-. In case of a rented property, the whole of the interest amount is allowed as deduction. The interest on borrowed funds in pre-construction period is allowed over a 5-year period commencing from the previous year in which the house is acquired or constructed.

The limit of repayment of housing loan qualifying for deduction u/s 80C is Rs. 1,50,000/- (including Stamp Duty, Registration Fee incurred for the purpose of transfer of such residential house property).
Section 54 of the Income Tax Act provides relief to an individual or Hindu Undivided Family from capital gains arising from transfer of a residential house held by the assessee at least for a period of 36 months. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a single residential house in India is exempt u/s 54. If the amount of capital gains is proposed to be utilised, but is not so utilised up to the due date for filing of return then, the amount of unutilised capital gain is required to be deposited in the "Capital Gains Account Scheme, 1988".
Section 54F of the Income Tax Act exempts long term capital gains arising from transfer of any long term capital asset other than a residential house. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a residential house is exempt u/s 54F. To be entitled to this exemption the assessee should not own more than one residential house other than the house sold as on the date of transfer. The provisions of depositing the unutilised capital gain in the "Capital Gains Account Scheme, 1988" as explained above is also applicable.
Section 54EC of the Income Tax Act provides relief from capital gains arising from transfer of any capital asset on or after 1st April 2000 shall be exempt to the extent such capital gain is invested within a period of 6 months after the date of such transfer in the long term specified asset provided such specified asset is not transferred or converted into money within a period of 3 years from the date of its acquisition. However, the investment made on or after 1st April 2007 in the long term specified asset by assessee during any financial year cannot exceed Rs. 50 lakh. For claiming this exemption, the capital gains have to be invested (investment not to exceed Rs. 50 lakh during the FY in which the original asset is transferred or in the subsequent FY) within 6 months of the date of transfer in notified bonds issued by:
a) National Highways Authority of India (NHAI)
b) Rural Electrification Corporation Ltd. (REC)

Documents Required

Registration of a property includes necessary stamping and paying of registration charges for a sale deed and getting it recorded at the sub-registrar's office of the concerned jurisdictional area. If a property is purchased from a developer directly, getting it registered amounts to act of legal conveyance. In case the purchased property is a second or third transaction, it involves a duly stamped and registered transfer deed. Nowadays, property registration process is computerized in most states.

a) Original copies of the chain of title agreements and Building Plan approvals
b) Original registration and stamp duty receipts c) Possession Letter d) Original share certificate (In case of societies) e) Proof of payment of all dues like maintenance charges, electricity bills, phone, water and property taxes up to the date of handing possession f) NOC from the Society or other concerned body confirming no objection to the transfer.
a) Projects approvals can be verified from the corporation or the sanctioning authority’s office
b) Ownership documents can be confirmed from the Sub Registrar’s office where they are registered
c) Share certificate related to societies can be verified from the concerned Society itself
Clear and marketable Title, Sale Deed, Encumbrance Certificate, latest tax receipts, Occupancy Certificate, Building Plan Approvals and Possession Certificate.
New Sale Deed, PAN Card, Photographs.
Sale Deed, No Objection Certificate (NOC) from builder, NOC from banks, Building Plan approvals, Completion Certificate, PAN Card and Photographs.
Allotment papers of the plot, Building Plan approvals, Transfer Deed (in case of multiple owners), Sale Deed, PAN Card and Photographs.
a) Sale Deed
b) Title Deed
c) Approved Building plans
d) Completion Certificate ( Newly Constructed)
e) Commencement Certificate( Under-construction property)
f) Conversion Certificate( If agricultural land is covered to non-agricultural)
g) Khata Certificate (especially in Bangalore)
h) Encumbrance Certificate
I) Latest Tax Receipts
J) Occupancy Certificate