Interest in your dream home gets a high five

Mar 01 2016 : The Times of India (Pune)

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If your builder doesn't give you possession of that dream house within the romised three years, sweat ot. For, the 2016-17 Budget roposes tax relief on inter st payment on home loan if he property bought, or under onstruction, is completed within 5 years from the end of he financial year in which he loan was availed instead f the current 3 years.The relief, under Section 4 of I-T Act, could help save ax up to Rs 60,000 per annum.n a further boost to the affor able segment, FM Arun Jaitey also proposed to allow eduction for additional inerest of Rs 50,000 per annum or loans up to Rs 35 lakh anctioned during the next fi ancial year for first-time ome-buyers, provided the alue of the house doesn't exeed Rs 50 lakh.
Assuming a loan of Rs 35 akh to be paid over 20 years, he annual deduction comes o around Rs 2.5 lakh, includng the Rs 2 lakh currently vailable. At 9%, the interest utgo in the first year would e Rs 3.12 lakh. So, the buyer will save Rs 75,000 if he is in he 30% tax-bracket, bringing own the effective interest ate in the first year to 6.8%. For the first seven years, he interest outgo will remain bove Rs 2.5 lakh and, so, the uyer will continue to get an nnual tax benefit of Rs 75,000.
For employees who don't et HRA benefits, the FM aised the deduction against ouse rent from Rs 2,000 per month to Rs 5,000. This would esult in tax savings in the ange of Rs 3,708 to Rs 12,204, epending on the income slab.