A number of Sections under the Income Tax Act, 1991 falls under the category where one can claim deductions. For instance, the deduction claimed under the heads of investments or expenses that are incurred during that particular financial year.
These home loan tax deductions help in decreasing the tax liability of an individual and by reducing their taxable income. But you must pay attention to the lock-in periods to such deductions. Otherwise, the amount of deduction claimed can further be revoked.
Let’s take a look at what are the home loan tax deductions? What are the heads under which one can claim such deductions? What are the lock-in periods?
Read- When Does Your Home Loan Tax Deduction Get Revoked
Owning a house is not just a mere dream now. The Government is providing various opportunities and facilities to help fulfill the dreams of individuals to buy their own house. That is a home loan.
While an individual takes a home loan, he/she gets additional tax deduction benefit from the Government. These facilities are provided by the Government to motivate individuals to purchase a house.
Individuals must have a thorough knowledge of home loan and the deductions attached with it and make full use of it. What are the deductions available under the Income Tax Act, 1961? What are the different heads under which deductions can be claimed in relation to the home loan taken?
Also Read:- Tax Benefit on Home Loan – Tips to Reduce Tax Liability
The contribution towards EPF is one of the best options for the salaried class individual in order to inculcate the habit of savings among them. In this way, you can build a large amount of corpus until your retirement that will help you to meet your financial need over the long term.
It is always advisable to invest in the EPF scheme as it immensely helps one to meet the retirement goal when you are employed and you are planning to save a huge amount. Savings invested in EPF are quite useful when you are running short of funds. EPF offers a host of benefits which most of us are unaware of like we also get the insurance benefits along with some other additional benefits which help an individual to meet any special occasion such as marriage, education, purchase a new house, meeting any medical emergency and many more.
The above-mentioned information will help one to clear their doubts regarding EPF so that they may be able to make a better and informed decision at the time of making an investment in EPF account to give themselves better security.
Additional- EPFO – 10 Things You Must Know About EPF!
After looking at the current employment status, maximum students tend to deviate towards higher studies or abroad options. But funding of these options is costly. So, people generally take education loan or loan against the property to finance their studies. Education loan is in high demand and is offered by many organizations and banks.
But the question comes which is the best?
On comparing both of the options on various grounds, the loan against property is the best. For instance, the repayment tenure for the loan against property is around 2-20 years, but for the education loan, it is 5-6 years which is very short. And due to the shortage of time, the EMIs are comparatively high. The second benefit is of the high amount, education loan when offered can give around 7-8 Lakhs, but loan against property offers you about 20-25 Lakhs which is a high amount.
Read:- Loan Against Property vs. Education Loan: Which one is better?
If the amount for the education loan exceeds 7.5 Lakhs, then the individual requires collateral, but this is not the case in loan against property. But if there is the case for a person that it is not possible to mortgage a property then for them the education loan is the best.
With the availability of a plethora of loan options today to help individuals to meet their general and personal requirements, one may choose a loan against property as compared to any unsecured loans like personal loans and business loans. This is because they carry a higher rate of interest which may cost you so much and availing a Loan Against Property would be more beneficial as it has a lower rate of interest and also it takes very less processing time to get your loan approved.
However, when you are about to finalize your decision between the two of them, you should be aware of the quantum of finance you would require, this will help you to choose the most favorable option. With the basic differences mentioned above, one might assess which option is more beneficial to you and why? Based upon your requirement and your current financial situation either of the loan types could be advantageous. But, you need to check each and everything related to your loan before you make any decision. You should check your eligibility first and also your repayment capacity as of now. A loan against property or LAP is a preferred option in case you want good terms, a lower rate of interest, longer tenure and high loan amount as compared to any unsecured loans.
In India, everyone from each section of the country desires to own a house of his/her own. But because of some reason or the other are not able to do so. The Indian Government is trying its best to motivate people to purchase their own house or construct one with schemes like Pradhan Mantri Jan Dhan Yojana (PMJDY).
There are many benefits which an individual can claim while taking a home loan. The authorities under whom individuals are entitled to these claims as and when the requirements are fulfilled are also stated. You can enjoy various deductions such as:
- Deduction for first-time buyers
- Deduction for a joint home loan,
- Deduction for interest paid on housing loan
- Deduction in respect of interest paid towards home loan during pre-construction period
- Deduction for stamp duty and registration charges
- Deduction on principal repayment
There are multiple deductions and savings which you can avail through home loan so to earn those benefits be very cautious while applying for it.
Related:-Tax Benefits On Your Home Loan Emi That You Need To Know About
People in India stress over the value of the property owned. Everyone wants to earn from the property either by providing it for rental purposes or by selling it off at a higher rate than the purchase rate.
When in need of funds people tend to take personal loans which have a higher rate of interest and EMIs with shorter repayment period, and it tends to increase the chances of non-repayment of the loan. But on the other hand, there is a Loan Against Property.
Before opting for a loan against property, you should consider asking following questions such as type of property that can be used, eligibility criteria to get loan, loan amount that can be availed against that property, documents needed, repayment options, time for the loan approval and so on. Always ask these questions first before applying for a property loan.
Additional Reading:- Important Question To Asked For Applying For Loan Against Property