This page has described all the tax guidelines that one need to understand before buying a house property. It will introduce home buying and property taxes with all the necessary guidelines.
A deduction of up to INR 2 lakhs can be claimed against home loan interest regardless of the fact if the owner is residing in that house or not. The entire interest of the home loan is eligible for deductions.
But there are conditions defined for claiming this INR 2 lakhs rebate:
If your home loan does not satisfy any of the above conditions then you can claim a deduction only for INR 30,000. If any home loan is taken for reconstruction or repairs or renewal of house property, then also the eligible deduction will be INR 30,000. Such deduction can be claimed only in the starting of the financial year in which the property construction / purchasing is completed.
When the house is under construction, no deduction can be claimed against home loan. The time-period from taking the loan to completing the construction is called pre-construction period. Deductions can be claimed only after the construction get over. Interest paid during the pre-construction period can be claimed as a tax deduction in five equal installments once the construction gets completed.
Up to INR 1,50,000 can be claimed against principle repayment of the home loan which is specified in Section 80C. check the loan installment details to confirm the principle repayment amount. There are also conditions specified to be eligible for this deduction.
The conditions are:
Stamp duty and registration charges and other related expenses are also eligible for deduction under Section 80C and the maximum deduction can be claimed is INR 1,50,000. This exempts can be claimed in the same year of the making these payments.
This is the recently added section of the Income Tax Act which provides a tax benefit of up to Rs.1,00,000 to the first-time homeowners. But this deduction can be claimed only if few conditions are met. This deduction is open for Indian citizens and NRI's.
The conditions are:
The self-employed or freelancer don't need to submit any documents in anywhere and not even to the Income Tax Department. But you need to keep the documents safely in case IT department asks you for any proof. In regarding tax payment, you will need to calculate that during calculating advance tax liability for every quarter.
Yes, you can claim both the benefits if your employer offers HRA as a part of your salary component and you are paying a home loan.
The “Income from House Property” section is specified to mention income generated from a house you owned. But if the property is used for carrying on business or profession than it should not be taxed under this section of the income tax form.
To calculate income from house property:
As property value for the self-occupied house is zero if you claim home loan interest deduction on it then it will be shown as a loss from house property and this loss will be adjusted against income from other sources.
What properties are included in the house property as per the Income Tax Act?
A home or office or shop or a building or land or parking lot that you own is referred as house property. All type of house property is taxed at same rate and income generated from them will be mentioned under the “income from house property” in the income tax return form. If a house property is used for carrying business or profession or freelancing work, then it will be mentioned under the “income from business and profession” head. Expenses on its repair and maintenance are allowed as business expenditure.
What does it mean by being the owner of a house property?
The legal owner of the house property is the person under whose name the property is legally registered. Someone who can exercise the rights of the owner of that property by himself, not on someone else’s behalf.
What does a self-occupied house property mean?
When someone uses a property for the own residential purpose it is called a self-occupied house property. The property can be occupied by the owner’s family and in that condition also, the property will be considered as a self-occupied house property. Also, a vacant property will be considered as a self-occupied house property. If the owner owns multiple house property then only one will be considered as self-occupied house property and the other will be considered as let out property. The owner can choose from the properties, which one he wants to use as self-occupied house property.
What is a let-out house property?
A house property that was on rent for the whole or part of the year will be considered as let-out property. Also, if someone owns two property than the second one will be considered let-out house property.
How is an inherited property taxed?
If you have any property inherited from your parents, then it will be calculated as your own property. If you have more than one property in total including that, than one from them will be considered as taxed property.