How does it Benefit Your Income Tax When You Buy a Ready-To-Move-In Apartment
Are there any income tax benefits of buying a ready-to-move-in flat? Yes, there definitely are many. Notwithstanding the fact that an under-construction apartment is relatively cheaper to buy, a payer of income tax gains only when she/he is buying a property that is ready for occupation.Let us have a look at income tax gains a buyer of a ready to move in property would get
You get a waiver of INR150,000 if you buy a house that has been completed and can be immediately occupied. This relates to the deduction for the principal amount paid for a home loan, according to section 80 C of the Income Tax (IT) Act.
How do you gain income tax on the interest of a loan?
According to section 24(b) of the IT Act, a deduction of up to INR200,000 is allowed for the interest paid on your first home’s loan. It is only applicable as long as you buy a home that is ready to move in and you happen to occupy it. On the other hand, if the home is occupied by a tenant or is not self-occupied, then the deduction amount has no limit. In other words, it implies that the interest paid on the entire loan can be claimed.
In case you buy an under-construction home, you are eligible to claim the paid amount as interest only if the project has been completed within the duration of 5 years since the time the loan was initiated. Suppose, the property does not get ready within 5 years, then you will see your tax gain reduced to INR30,000 from a sum of INR200,000.
Also, you cannot claim the total interest amount at one go if you buy a property that is under construction. It is mandated that the amount needs to be claimed in 5 installments and is delivered to you over the duration of 5 years, beginning from the year of the handing over of the house to you.
Income tax gains on GST
If a completion certificate of the house you bought has already been issued, or in other words, it is ready for occupation, GST is not all charged in the case that the builder has been paid the entire consideration. This relates to section 5(b) of schedule II to be exact or the CGST Act, 2017. In the case before July 1, 2017, only a part of the consideration has been paid because the property was under construction, then a service tax of 4.5% shall be applicable. On the other hand, for any under-construction house bought later than July 1, 2017, GST would definitely be charged at @12.36%.
Get the benefits of buying your first home and reap the majority of these tax benefits immediately. Affordable homes are not so tough to come by. Contact Nestcon Shelters, one of the premier real estate development companies of Hyderabad, by dropping a mail or calling them on 9666123463 to have a look at one of their attractive ready to move in apartments or villas.