Question 1

What are the necessary documents that are required before buying a commercial/residential property?

Accepted Answer

Ownership document of the property owner & buyer. Agreement to sell – Includes a description of the property, terms of conditions between the buyer and the seller, including agreed purchase price. Absolute sale deed and title deed - This is the actual transfer record of ownership of the property. It is registered at the sub registrar's office under whose jurisdiction the property would fall. Title search and report – This document records the history of the property and its owner and has to be registered with the concerned authority. Khata certificate - Provides proof that the property has an entry in the local municipal records. Receipt of property tax – This document clarifies the status of previous taxes paid/due. Encumbrance certificate – This states that the property is free from all encumbrances or loans. Sanctioned building plan by statutory authority - This is to ensure that the buyers are watchful about any deviations from the sanctioned plan made by the developer. Power of Attorney (If any) – If any person is acting on the authorization of the owner of the property.

Question 2

What is the procedure for execution of the Agreement to sell?

Accepted Answer

Possession letter from the builder – The original copy of possession letter should be received by the buyer on the specified date in the letter. Payment Receipt – This is the most important document for home loan and should be taken by the buyer from the seller. It can be used during the resale of the property. Property documents for loan purpose – List of original property document Closure letter with a penalty (if any) NOC by the bank Sale agreement – An original sale agreement needs to be obtained as a sale deed for the property. It includes terms & conditions for the sale along with the time of completion, payment/part payment details of the purchase. Property Tax receipt (till the date of registration) – Tax receipt consists of property details such as property area, owner's details among other related information. Tax is levied on the purchase of property which acts as one of the most important documents during 'agreement to sell' process. All the pages of the document should be signed by all the parties.

Question 3

What are Stamp Duty and Property Registration Charges?

Accepted Answer

Stamp Duty Stamp duty is the transactional tax levied compulsory, which plays a key role in the transactions made on a property. It is pretty much similar to what a government collects for sales tax and income tax. Stamp duty is charged on the present agreement value or market value, whichever is high. It is levied by states and therefore, the rate varies from state to state. Stamp Duty can be paid by Franking (submitted documents are processed by authorized banks via a franking machine), Stamp Paper (long & inconvenient method) & E-stamp (NEFT/RTGS). Registration Charges If the property is located in Corporation or Municipal Council area – 5% Stamp Duty, 1% LBT and 1% Registration Charges or up to Rs. 30,000/- whichever is less. If the property is located in Rural area – 4% Stamp Duty, 1% LBT and 1% Registration Charges or up to Rs. 30,000/- whichever is less.

Question 4

Home loan on Principal Repayment

Accepted Answer

After your home loan is approved and you start paying EMIs, you pay for it in two parts - the principal amount and the interest. Under section 80C, the total amount of principal paid by you in a financial year (1 April to 31 March) can be claimed as a deduction from gross total income. This is a very big relief provided by the Government as you are required to pay hefty equated monthly instalments (EMI).

Question 5

Deduction on interest

Accepted Answer

Homeowners can file a claim for deduction on their home loan interest of up to Rs. 2 Lakhs. This is applicable if the owners are living in the property or if it is vacant as well. In case, if you have put your property on rent, then the entire interest on the home loan can be deducted. However, your deduction on interest is limited to Rs. 30,000 instead of Rs 2 lakhs if both the following conditions stand satisfied: The loan is taken on or after 1 April 1999 The purchase or construction is not completed within 5 years from the end of the FY in which loan was availed

Question 6

Tax Deduction for First-Time Homeowners: Section 80EE

Accepted Answer

Under Section 80EE of the Income Tax Act, the homeowners with only one house property on the date of sanction of loan can avail the tax benefit of up to Rs.50,000. *These benefits are not available for an under-construction property. Do you own more than one house? If you own more than one house, you need to file the ITR-2 form.

Question 7

Benefit for Joint Owners and Co-Borrowers

Accepted Answer

If you are applying for a joint home loan along with your spouse, friend or a relative and you are co-owning the property then you are eligible for tax benefits. And can each applicant make a claim up to the full amount under Section 80C and Section 24.

Question 8

Understanding HRA and Home Loan

Accepted Answer

House Rent Allowance (HRA) is a salary component, allotted by the employer towards employees rent accommodation. It is very beneficial for the employee as it gets calculated for tax deduction purposes while filling TDS for a financial year. In case, you have a home loan for your property, and you are living in another apartment on rent, then you are allowed to make two separate claims. One is for the home loan tax benefit and another for the benefit pertaining to HRA (House Rent Allowance). List of documents required for both are different, so, plan in advance and keep them ready to enjoy the maximum tax benefits under such condition.

Question 9

Income from House Property

Accepted Answer

You own a property and you have put it on rent, now you are receiving a monthly income (known as 'annual value') from that property, then the rent amount becomes taxable. But if the owner is using the property for operating or running a business, it will not be taxed as it comes under income from home property. If an individual owns a house property, the rent he receives from the house becomes taxable. This received rent is referred to as. However, the taxpayer can save the tax on this. If he uses this property Income from House Property is Taxable If: The house property comprises of the building and/or any land attached to it The taxpayer is the owner of the property The taxpayer should not use the house property to run any business or profession

Question 10

Wealth Tax

Accepted Answer

Following are the basic provisions of Wealth Tax law which are to be kept in mind: Wealth-tax is levied on the following persons only: An individual; A Hindu undivided family (HUF); and A company. Persons other than individuals, Hindu Undivided Families (HUFs) and companies are not required to pay wealth tax.

Question 11

Home Loan Tax Benefit under Section 24

Accepted Answer

Under Section 24(b), you can claim a deduction of up to Rs. 2 lakhs for the home loan interest paid in a financial year, if the property is self-occupied. If you have let-out or rented the property, you can claim a deduction of the entire interest paid on the home loan.

Question 12

What is the procedure to claim tax benefits for a property under construction?

Accepted Answer

The tax benefits on home loans for under-construction properties can be claimed in two phases. First, you can claim the interest paid during the pre-construction period in five equal installments starting from the year of possession of the property. Second, you can claim the principal repayment benefits under Section 80C only after the construction is completed and possession is taken.

Question 13

Can I claim tax benefits if the property is in the name of my spouse?

Accepted Answer

Yes, you can claim tax benefits on a property in your spouse’s name if you are a co-borrower of the home loan. Both spouses can claim tax benefits under Section 24(b) for the interest paid on the home loan and under Section 80C for the principal repayment.

Question 14

What is the impact of home loan prepayment on tax benefits?

Accepted Answer

Prepayment of home loans does not affect the tax benefits directly. You can still claim the interest paid and principal repayment benefits for the period up to the date of prepayment. However, prepaying your loan will reduce the total interest you pay, which could impact the amount you claim as interest deduction for that year.

Question 15

Can I claim tax benefits if the home loan is taken jointly with another person?

Accepted Answer

Yes, if the home loan is taken jointly with another person, both parties can claim tax benefits separately. Each borrower can claim a deduction of up to Rs. 2 lakhs under Section 24(b) for interest on home loan and up to Rs. 1.5 lakhs under Section 80C for principal repayment, provided they meet the other conditions.

Question 16

What are the tax benefits if the home loan is for a rented property?

Accepted Answer

If the property is rented out, you can claim the entire interest paid on the home loan under Section 24(b) as a deduction. Additionally, you can claim the principal repayment benefits under Section 80C, subject to the limit of Rs. 1.5 lakhs. Rental income from the property will be taxable under 'Income from House Property'.

Question 17

Is there a tax benefit for home loan taken for renovation or repairs?

Accepted Answer

Yes, tax benefits are available for home loans taken for renovation or repairs. The interest on such loans is eligible for deduction under Section 24(b) up to Rs. 2 lakhs, provided the property is self-occupied. The principal repayment is also eligible for deduction under Section 80C, up to Rs. 1.5 lakhs.

Question 18

Can I claim tax benefits on a home loan for an old property?

Accepted Answer

Yes, you can claim tax benefits on a home loan for an old property. The benefits under Section 24(b) for interest paid and Section 80C for principal repayment are applicable irrespective of whether the property is new or old.

Question 19

Are there any tax benefits for a home loan for a property purchased from a relative?

Accepted Answer

Yes, tax benefits are available for a home loan taken for a property purchased from a relative. The eligibility for claiming deductions under Section 24(b) for interest and Section 80C for principal repayment remains the same, provided the loan and property meet the required conditions.

Question 20

How does the tax benefit on home loan change if I have multiple properties?

Accepted Answer

If you have multiple properties, you can claim tax benefits on home loans for each property. For self-occupied properties, you can claim interest up to Rs. 2 lakhs under Section 24(b) for each property. For rented properties, you can claim the entire interest paid. The principal repayment benefits under Section 80C are capped at Rs. 1.5 lakhs per financial year across all properties.

Question 21

Can I claim tax benefits for a home loan if the property is in the name of a minor?

Accepted Answer

Yes, tax benefits can be claimed for a home loan if the property is in the name of a minor, provided that the loan is repaid by the guardian and the income from the property is included in the minor's income for tax purposes.

Question 22

What are the tax benefits for home loans taken for commercial properties?

Accepted Answer

Tax benefits for home loans taken for commercial properties are not available under Sections 24(b) or 80C, which are specifically for residential properties. Interest paid on loans for commercial properties is considered a business expense and can be deducted from business income.

Question 23

Are there any tax benefits if the home loan is taken for constructing a property?

Accepted Answer

Yes, tax benefits can be claimed for a home loan taken for constructing a property. The interest on the loan can be claimed under Section 24(b) as a deduction, and the principal repayment can be claimed under Section 80C, subject to the applicable limits and conditions.

Question 24

Can I claim tax benefits if the home loan is repaid early?

Accepted Answer

Yes, you can claim tax benefits on the home loan even if it is repaid early. The benefits for the interest paid and principal repayment are calculated for the period up to the date of prepayment. Early repayment will reduce the total interest paid, which might affect the amount claimed for that year.

Question 25

What if the home loan is taken for a property that is not yet constructed?

Accepted Answer

For a home loan taken for a property that is not yet constructed, you can claim the interest paid during the pre-construction period in five equal installments starting from the year in which you take possession of the property. Principal repayment benefits can be claimed under Section 80C only after the construction is complete and possession is taken.

Question 26

Can I claim tax benefits if the home loan is taken for a property in a foreign country?

Accepted Answer

No, tax benefits under Indian tax laws are applicable only for home loans taken for properties located within India. Loans for properties outside India do not qualify for tax deductions under Sections 24(b) or 80C.

Question 27

Are there any tax benefits for home loans taken for repairs and maintenance?

Accepted Answer

Yes, you can claim tax benefits for home loans taken for repairs and maintenance. The interest on such loans is eligible for deduction under Section 24(b), up to Rs. 2 lakhs if the property is self-occupied. The principal repayment is also eligible for deduction under Section 80C, up to Rs. 1.5 lakhs.

Question 28

How do tax benefits change if the property is jointly owned?

Accepted Answer

If the property is jointly owned, each owner can claim tax benefits on their share of the home loan. Under Section 24(b), each owner can claim a deduction of up to Rs. 2 lakhs for interest paid, and under Section 80C, up to Rs. 1.5 lakhs for principal repayment, subject to their share in the loan.

Question 29

Can I claim tax benefits if the property is rented out and I live elsewhere?

Accepted Answer

Yes, if the property is rented out and you live elsewhere, you can claim the entire interest paid on the home loan under Section 24(b) as a deduction. You can also claim the principal repayment under Section 80C. Rental income from the property will be taxable under 'Income from House Property'.

Question 30

What are the tax benefits if the property is used for business purposes?

Accepted Answer

If the property is used for business purposes, the interest paid on the home loan can be claimed as a business expense. However, the principal repayment does not qualify for deductions under Section 80C. The property income is taxed under 'Income from Business or Profession'.

Question 31

Are there tax benefits for home loans taken for purchasing property from a builder?

Accepted Answer

Yes, you can claim tax benefits for home loans taken to purchase property from a builder. The interest paid on the loan is eligible for deduction under Section 24(b), and the principal repayment is eligible under Section 80C, subject to the applicable limits and conditions.

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