HOME LOAN FAQS

HOME LOAN FAQS

Do I get a loan on ‘non agricultural’ land? If yes, do I get a tax benefit? 

Yes, you can get a plot loan for non-agricultural land based on your income and the title of the property. There are no tax benefits available on a loan taken to acquire a plot of land. Plot loans are more restrictive and available only to non-agricultural plots bought from statutory authorities or approved developers.  

I have claimed deduction of home loan interest of Rs 1.5 lakh for three years, after which I sell the property and pre-pay the loan off. How will this impact the deduction claimed for three years? What do you recommend to minimise tax burden in this scenario? 

There is no impact of the sale of property on the deduction claimed in previous years for interest payable on a home loan taken to acquire that property. This is irrespective of the period for which property is held.
 
I am a salaried employee. So is my husband. If we take a joint loan and buy an apartment in which we are co-owners, does it mean that I can avail of tax benefit of Rs one lakh principal and 1.5 lakh interest? Can my husband too can avail of the same amount of benefit so the combined benefit would be Rs five lakh, then?

Also, if it is a self-occupied house then am I allowed to pay rent for another property in the same city? Can I claim loan tax benefits for a self-occupied house and HRA for a rented house too?

If you and your wife are owners or co-owners of the property you can get exemption for home loan repayments in the ratio of your respective shares in the loan.

Tax deduction benefits will be available for each of you separately under section 24 (interest payable on the loan) limited to Rs 1,50,000 each if property is self occupied and under section 80 C limit to the fullest extent of Rs 1,00,000 each (for the principal repaid) as per the ratio of the loan.

You can also claim exemption for HRA by actually paying rent to stay in a rented house not belonging to you. Which city the rented house is in will not make any difference to claim the exemption.

I am salaried employee earning a net income of 42 k pm and I wish to borrow a home loan in the next one month. What should be my choice between fixed and floating home loan rates?  

A true ‘fixed’ interest rate is one which remains fixed during the entire tenure of the loan. Very few banks offer actual true fixed interest rates. For a very short period you can also have dual rate loans (fixed rates for the first two-three years and thereafter the prevailing floating rate) by HDFC Limited, LIC Housing, ICICI  and SBI. There are good schemes but available for a short while.

In the case of any EMIs being skipped, is there any period concession? If not, then what are charges to be levied?

The bank will charge you a penalty on the late payment of your EMI as well as a penal interest for the period of delay. If a cheque or ECS instruction has bounced, there could be dishonour charges as well that would be applicable. This amount will vary from bank to bank. However, you can contact your bank in this unfortunate scenario.  

It is advisable pay your EMIs on time to avoid being on a defaulter’s list. The bank can take legal action against you if you continue to default. It will also affect your credit record reducing your ability to borrow in the future.

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