Unknown Facts About Home Loan Tax Benefits That Loan Borrowers Should Know
Jun 12, 2017 Home Loan
Taking any kind of loan is a burden but the home loan has its own benefits. The most common benefit being tax exemption but do you know there are several other kinds of benefits that a loan borrower can avail from home loan. Read through to know more about such benefits which often get unnoticed by the home buyers.
Loans taken from relatives and friends are liable under tax benefit
If you have taken a loan from relatives and friends then that is also eligible for tax benefit. You can get an interest certificate from your relative and friend and then claim the tax deduction on the interest component. Also, tell your lender to show the interest paid while filing their returns.
You can claim tax deduction on loan charges
According to the section 2(28A), the definition of interest is termed as charges and fees paid related to any kind of a loan. Hence you as a home buyer is eligible to claim tax break over prepayment charges, processing fees as well as other home loan costs falling under interest column.
Tax relief on the home loan interest can be claimed if paid during the construction stage.
If you are paying your home loan interest during the construction period of your housing project then you claim it in five equal instalments. But the buyers can only claim after receiving the completion certificate.
Missed an EMI, you can get tax benefit
Even if you have missed an EMI, you can still claim the tax benefit on the housing loan interest component. There should be a copy of interest certificate with the payee issued by the lender clearly stating the entire loan amount and the total interest to be paid in the respective financial year. Although the tax deduction on the principal amount won't be valid here.
Co-owners and co-borrowers can enjoy tax breaks
Co-owner/Co-borrowers not only are the joint owners of the property or pay the monthly instalments but also can avail the tax benefits against the home loan borrowed from the financial institutions.If the property is owned by both spouses and both of their names are mentioned in the property document then the tax benefit on the principal and interest amount can be availed.
Principal repayment benefit
For qualifying for long term capital gains holding period is decided for 24 months.However, if the principal repayment benefit is claimed or the property is sold before five years of purchase of the property or availing loan then the benefit would be reversed.The total benefit availed would be added to the annual income of the buyer.
Loans taken from relatives and friends are liable under tax benefit
If you have taken a loan from relatives and friends then that is also eligible for tax benefit. You can get an interest certificate from your relative and friend and then claim the tax deduction on the interest component. Also, tell your lender to show the interest paid while filing their returns.
You can claim tax deduction on loan charges
According to the section 2(28A), the definition of interest is termed as charges and fees paid related to any kind of a loan. Hence you as a home buyer is eligible to claim tax break over prepayment charges, processing fees as well as other home loan costs falling under interest column.
Tax relief on the home loan interest can be claimed if paid during the construction stage.
If you are paying your home loan interest during the construction period of your housing project then you claim it in five equal instalments. But the buyers can only claim after receiving the completion certificate.
Missed an EMI, you can get tax benefit
Even if you have missed an EMI, you can still claim the tax benefit on the housing loan interest component. There should be a copy of interest certificate with the payee issued by the lender clearly stating the entire loan amount and the total interest to be paid in the respective financial year. Although the tax deduction on the principal amount won't be valid here.
Co-owners and co-borrowers can enjoy tax breaks
Co-owner/Co-borrowers not only are the joint owners of the property or pay the monthly instalments but also can avail the tax benefits against the home loan borrowed from the financial institutions.If the property is owned by both spouses and both of their names are mentioned in the property document then the tax benefit on the principal and interest amount can be availed.
Principal repayment benefit
For qualifying for long term capital gains holding period is decided for 24 months.However, if the principal repayment benefit is claimed or the property is sold before five years of purchase of the property or availing loan then the benefit would be reversed.The total benefit availed would be added to the annual income of the buyer.
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