You don’t buy a house every other day. Truth be told, it is one of the most critical purchase decisions of your life. And as such, you should not settle for a mass-produced, pre-constructed property. Instead, you should have your house built exactly the way you want.
Ready-to-move-in properties generally overstate the cost of materials used and include many hidden expenses that drive the price up significantly. But when you are making decisions about the construction process, you can buy the materials you want, and keep the cost in check. What’s more, these days you can easily avail housing construction loan at attractive home loan rates.
Additional Read: Home Loan vs. Home Construction Loan
Another benefit of taking a construction loan for building your home is the following home loan tax exemptions you will become eligible for.
Under Section 24 of the Income Tax Act, you can claim deductions on the interest component of your home construction loan. In the case of self-occupied property, the maximum deduction allowed is Rs. 2 lakhs.
But, you can claim this deduction only if you complete the construction of your property within five years of taking the loan. Otherwise, you can claim a deduction of Rs. 30,000. If the property in question is not self-occupied, then regardless of the completion status, the amount which you can claim as an exemption is not subject to any limits.
Before taking a loan to avail this exemption, it is ideal to calculate your home loan eligibility online.
Under this Section, you can claim deductions on the principal component of your home loanfor construction. Once the construction of your property is over, you can claim a maximum deduction of Rs. 1.5 lakhs.
However, if you sell the property within five years from the date of possession, these benefits will be reversed i.e. the amount you claimed as a deduction, will be added back to your taxable income for the year in which the sale is made.
To qualify for this tax exemption, avail of housing finance after figuring out your eligibility with the help of an online home loan eligibility calculator.
If you are a first-time homebuyer, you can claim an additional deduction of Rs. 50,000 on the interest component of the house construction loan. You can claim this deduction every financial year until you have repaid the loan completely.
However, to avail of this benefit, the loan amount should be under Rs. 35 lakhs and the value of the property should be under Rs. 50 lakhs. Also, the date of sanctioning of the loan must fall between 01.04.2016 and 31.03.2017. You can claim this deduction over and above the exemption of Rs. 2 lakhs under Section 24.
Section 80EEA states that if a first-time homebuyer is not eligible for deduction under Section 80EE, he/she can claim an additional deduction of Rs. 1.5 lakhs on the interest component of loan taken for affordable housing between 01.04.2019 and 31.03.2020.
Additional Read: How to Claim Stamp Duty Exemption on Property
If you are looking to take a loan for housing construction, visit Tata Capital. We offer attractive home loan interest rates and flexible repayment options.
We encourage you to use our online home loan EMI calculator to compare different repayment options and see what works best for you. Our website also provides a home loan calculator to help you figure out the extent of amount you can avail. To know more, visit our website today.