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Tag: interest on home loan deduction section

  • Is it a very good time to go for a house mortgage steadiness switch amid the prevailing price cycle?

    Two banks, Bank of Maharashtra and Bank of Baroda have lowered the rates of interest on their dwelling loans regardless of rising rates of interest. Home mortgage processing charges have been waived by Bank of Baroda and charges have been lowered by 40 foundation factors to eight.5%. As against Bank of Maharashtra, which final week lowered its dwelling mortgage rates of interest by 20 foundation factors to eight.40%, making it one of many lowest within the sector. 

    For clients who apply for a mortgage with a credit score rating of 760 or larger and obtain disbursement (half or full), HDFC has launched a particular dwelling mortgage supply at 8.70%. The preferential charges supplied by these establishments are, nevertheless, solely good via March 31, 2023. So, debtors who have been planning to buy their dream home ought to select steadiness switch dwelling loans given the present price cycle. Let’s get viewpoints from varied sector specialists.

    CA Manish P. Hingar Founder at Fintoo 

    Amid sluggish demand attributable to current rate of interest hikes which have made dwelling purchases costlier, some banks and monetary establishments are providing particular charges to lure clients earlier than the top of the monetary 12 months. This alternative might be utilized to switch the excellent mortgage steadiness quantity.

    Balance switch dwelling loans is usually a good choice in case you are trying to save cash on curiosity funds. A steadiness switch dwelling mortgage lets you switch your present dwelling mortgage to a different lender who gives a decrease rate of interest. This may help you lower your expenses on curiosity funds and probably scale back your month-to-month funds as properly.

    However, extending the tenure whereas transferring might nullify the good points, so it is strongly recommended to keep away from doing so.

    Before you go for a steadiness switch dwelling mortgage, there are a number of elements to think about. First, you must ensure that the brand new lender gives a decrease rate of interest and that the financial savings you’ll get from the decrease price will offset any charges related to the steadiness switch like processing charges, prepayment prices and so on.

    Second, you must take into account the phrases and circumstances of the brand new mortgage, together with any penalties for early reimbursement, charges for late funds, and different prices. If you may acquire a decrease rate of interest of at the very least 35-45 foundation factors, it might be price contemplating switching your property mortgage.

    Finally, it is very important take into account your long-term monetary targets and whether or not a steadiness switch dwelling mortgage aligns with these targets or not. Before making a last determination, it is very important weigh all the professionals and cons and negotiate for higher mortgage phrases.

    Anshu Agarwal, Global Head of Finance at Branch International

    As everyone knows with the newest sequence of will increase in Repo charges Interest on dwelling loans has elevated. However, there are banks that are providing low-interest charges. Is this a very good time to switch your property loans or take a brand new one? Well, all of it relies on all of the phrases and circumstances of the prevailing and new lenders. 

    What is the processing charges, What are the foreclosures prices for the prevailing lender and New lender? You also needs to search for opinions of the brand new lender. Loads of distributors present dwelling loans at a decrease price after which finally enhance it over time. If all appears to be like good it is best to go for the brand new lender as this may scale back your EMI.

    Mahesh Shukla, CEO & Founder, PayMe

    A steadiness switch dwelling mortgage is an choice that lets you switch your present dwelling mortgage to a brand new lender, who then pays off your outdated mortgage. This is usually a good choice should you’re trying to save cash on curiosity or should you’re sad together with your present lender’s service. If a number of banks have lower rates of interest on dwelling loans, this may very well be a very good time to think about a steadiness switch dwelling mortgage. 

    However, earlier than making any choices, it is best to rigorously consider your monetary scenario and targets, and examine the phrases and circumstances of various lenders to search out the one which finest meets your wants. It’s additionally vital to notice that steadiness switch dwelling loans typically include charges and prices, so it is best to take into account these elements in your decision-making course of. 

    Additionally, it is best to be sure that you meet the eligibility standards of the lender you might be contemplating and that you’ve a very good credit score rating, as these elements can influence your capacity to acquire a steadiness switch dwelling mortgage. Ultimately, whether or not a steadiness switch dwelling mortgage is an efficient choice for you’ll rely in your particular person circumstances, so it is vital to do your analysis and seek the advice of with a monetary advisor if vital.

    Pramod Kathuria, Founder & CEO, Easiloan

    Recently, quite a lot of banks have slashed their respective rate of interest, the supply is relevant for restricted time. This may very well be an important alternative for the house mortgage patrons in addition to present buyer to save cash by decreasing EMI value related to the identical.

    However, earlier than deciding to go forward, the client are requested to evaluate the phrases and circumstances rigorously. Here are few factors to test earlier than continuing forward –

    Processing Fee – The banks cost sure % of charge whenever you apply to a brand new financial institution. This might be important expense whereas shifting the mortgage.

    Prepayment Fee – Some financial institution cost sure % in case of pre-payment of your mortgage earlier than the top of tenure. It might fluctuate from financial institution to financial institution.

    Impact on Credit Score – Every time you apply for a mortgage, it will get recorded in your credit score report.

    Important to manner the all of the elements earlier than making any choices; attain out to monetary advisor if you need.

    Ameet Venkeshwar, Business Head, LoanTap

    Balance switch loans is usually a sensible monetary transfer for these trying to handle their debt extra successfully. Due to the rise in repo price the curiosity has gone up on the prevailing dwelling loans however banks and monetary establishments are nonetheless onboarding new clients at a decrease price.

    This makes steadiness switch loans a really enticing choice to discover. The lending house is evolving and clients now have entry to a number of choices with extra banks and monetary establishments offering dwelling loans at enticing rates of interest.

    Anirudhha Bose, Chief Business Officer

    Before speeding in to switch your property mortgage, do have in mind most dwelling loans are supplied at a floating price – so the enticing rate of interest that’s being marketed by the brand new financial institution could also be simply be an inaugural supply or a “hook”. Being a floating price mortgage, the preliminary price is topic to vary and there’s no assure that it’s going to not rise again to the extent of your earlier lender’s price! 

    However, if the brand new mortgage is being supplied to you at a set price that’s decrease than your present lender’s price of curiosity, it makes the switch much more profitable. Also, remember the fact that you’ll find yourself incurring pre-payment prices together with your present lender whereas transferring out your mortgage, so do the maths and ensure that the costs you’ll be incurring whereas closing out your outdated mortgage don’t truly exceed the curiosity saving you’ll make on the brand new one. 

    Typically, it is smart to switch a house mortgage to a decrease curiosity one provided that a very good chunk of the mortgage remains to be excellent. If you’re approaching the top of your mortgage tenure, it the costs you’ll find yourself bearing will in all probability outweigh the fee saving on the brand new mortgage.

    Nitin Purswani, CEO Medius AI

    It may very well be a very good time to go for steadiness switch dwelling loans, particularly contemplating that a number of banks have lately lower rates of interest on dwelling loans. By transferring your property mortgage steadiness to a brand new lender with a decrease rate of interest, you might be able to scale back your month-to-month funds and lower your expenses over the lifetime of the mortgage. 

    However, it is vital to rigorously take into account all of the charges and prices related to the steadiness switch, in addition to any prepayment penalties or different phrases and circumstances which will apply. Additionally, it is essential to evaluate your monetary scenario and decide whether or not a steadiness switch is smart to your particular wants and targets.

    Sumeet Srivastava, Founder & CEO, spocto (a Yubi firm)

    It isn’t just rate of interest however quite a lot of issues one ought to take into account whereas transferring loans – your Current Credit rating, the entire tenure, the excellent curiosity you paid & the interval for which you wish to retain the property, and so are a number of the parameters one ought to leverage. In our advice, discuss to your present lenders and their gives for altering charges reasonably than going for a brand new lender. Re-negotiation together with your present lender is generally one of the best ways.

     

     

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  • How to assert earnings tax advantages on house loans in FY23?

    1. CA Anamika Rana, Finance Content Creator says, “If you’ve gotten taken a house mortgage to buy or assemble a home, chances are you’ll be eligible for a tax deduction on the curiosity paid on your own home mortgage. 

    Section 24(b) of the Income Tax Act permits for a deduction of as much as Rs.2 lakh on the curiosity paid in direction of your own home mortgage in a monetary yr.

    To avail of this deduction, you must just be sure you have accomplished the development or acquisition of the property earlier than claiming the deduction. 

    Additionally, the property must be self-occupied or set free on hire to be eligible for the deduction.

    It’s additionally vital to notice that when you’ve got collectively taken a house mortgage with another person, each of you possibly can declare a deduction of as much as Rs.2 lakh every on the curiosity paid.

    To declare the deduction, you must submit the related paperwork to your employer or the earnings tax division, because the case could also be. These paperwork could embody the mortgage settlement, curiosity certificates, and different related paperwork.

    So, ensure that to discover this feature when you’ve got taken a house mortgage on your property.”

    2. Deepak Bhati, Chartered Accountant and Co-founder of DigiWhistle says, “In 2023, buying a new home is on trend, despite various interest rate hikes by the RBI. So, if you are planning to book a new house or flat – here are some tax benefits you can avail on your home loan that many people don’t know about.

    Repayment of the principal amount: The repayment of the principal amount of a home loan is eligible for a deduction of up to Rs. 1.5 lakh per annum under Section 80C.

    Stamp duty and registration charges: The expenses incurred on stamp duty and registration charges for the purchase of a house are also eligible for deduction under Section 80C.

    Pre-construction interest: Interest paid during the construction period of the property is eligible for a tax deduction in five equal installments starting from the year in which construction is completed.

    It is important to note that these deductions are available only if the property is self-occupied.”

    3. Nidhi Nagar, Finance Content Creator says, “If you have bought your first home, Here is how you can get extra tax deduction on your home loan interest. 

    As we all know under section 24 b we can get deduction of up to 2 lakh on home loan interest but you can also claim up to ₹1,50,000 deduction under Section 80EEA. 

    This section was introduced to extend the benefits allowed under Section 80EE which is 1 lakh. 

    80EEA is for low cost housing so your cost of house should be 45 lakhs or less than 45. 

    You can claim this deduction if your taken loan was sanctioned during the period 1st April 2019 and 31st March 2022.

    Fir example: let’s say Mr. Sharma bought a home worth 45 lakhs in March 2020, and paying 4,00,000 interest yearly

    Now he can claim a ₹200,000 deduction for home loan interest under Section 24. And as the house’s stamp value is ₹45 lakh, he is eligible for a ₹1,50,000 deduction under Section 80EEA. So Sharma is eligible for a total deduction of ₹3,50,000 under Sections 80EEA and 24..”

    4. Finance Content Creator – Tarun Malhotra says, “There are several ways to save tax on home loan but one I notice people are least aware of is joint home loan, which, when claimed with a spouse or another person can increase overall tax benefits. 

    Firstly, interest rates on joint home loans are comparatively much lower than that of individual ones. 

    Additionally, all co-borrowers can claim a deduction on the principal amount and interest payment of the home loan under Section 80C upto 1.5lakh (each) and Section 24(b) upto 2 lakh (each) of the Income Tax Act, respectively. 

    Lastly, if the loan is taken for the purchase of an under-construction property, co-borrowers can claim a deduction on the interest paid during the construction period. 

    It is always advisable to seek advice from a tax expert to understand the nuances of tax savings on any typical home loan.”

    5. Finance Content Creator – Adarsh Gupta says, “The real estate sector in India is one of the fastest-growing industries in the world. However, buying real estate on a home loan has become more expensive due to various factors such as government policies, inflation rates, and interest rates.

    Fortunately, you can still avail of tax benefits on home loans under section 80EE of the Income Tax Act. This section offers additional tax benefits to first-time homebuyers. 

    As per this provision, a deduction of up to Rs. 50,000 can be claimed on the interest paid towards a home loan for first-time home buyers. To claim this deduction, the property’s value should not exceed Rs. 50 lakhs and the loan amount should not exceed Rs. 35 lakhs. 

    The deduction is over and above the limit of Rs. 2 lakhs available under Section 24(b) of the Income Tax Act. This tax benefit can be claimed for a maximum of 5 consecutive years, starting from the year of the loan repayment.”

     

     

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  • How new tax regime could affect homebuyers in FY24?

    For middle-class and salaried people, the brand new revenue tax slabs launched within the Budget 2023 have proven to be extra advantageous when it comes to taxation. The outlay for PMAY was enhanced by 66% to ₹79,000 crore in Finance Minister Nirmala Sitharaman’s price range speech, which is a lift to the true property sector when it comes to reasonably priced housing. However, on the identical time, the brand new tax regime comes with no advantages that taxpayers can make the most of beneath any Section, together with Section 80C. 

    The FM proposed to vary the tax construction within the new regime by lowering the variety of slabs to 5 and elevating the tax exemption restrict to ₹3 lakh, in addition to reducing the surcharge fee from 37% to 25% on the very best tax fee within the nation of 42.74%. The FM additionally proposed to extend the tax rebate restrict to ₹7 lakh from ₹5 lakh beneath the brand new tax regime. However, for homebuyers revenue tax deduction of as much as ₹1.50 lakhs on the reimbursement of housing loans (principal + curiosity) beneath Sec 80C is accessible beneath the outdated tax regime and switching to the brand new tax regime will break off the 80C profit for them, amid the truth that there isn’t any aid from greater dwelling mortgage charges amid skyrocketing inflation and rising EMIs.

    Archit Gupta, Founder and CEO, Clear stated “From the attitude of tax financial savings the brand new tax regime is just not going to learn the house consumers, as there isn’t any profit given beneath part 24(b) which permits the house consumers to deduct the curiosity fee of dwelling mortgage from their complete revenue upto ₹2,00,000. Further no deduction beneath part 80C is allowed which allows the taxpayers to deduct principal reimbursement of the house mortgage. Further part 80EEA is just not accessible as properly which permits further deduction of ₹1,50,000 in respect of curiosity of dwelling mortgage topic to fulfilment of sure situations.”

    Dhaval Ajmera- Director at Ajmera Realty Infra India Ltd said “The new tax regime will help many homebuyers who are seeking a good amount of liquidity. Additionally, this is going to have a significant impact on the affordable housing segment and the price brackets of flats below 1 crore. At the same time, with this liquidity coming in place, it will only help or boost demand that is currently being witnessed across the country. These days, people are considering real estate as an alternative asset class to park their investments. Hence, tax benefits or liquidity flow of such nature will boost the current increase in demand.”

    Gopal Bohra, Partner, N.A. Shah Associates stated “There is no benefit for homebuyer who is opting for new tax regime, under this scheme loss on account of interest on self- occupied house property is not allowed as set off against any other income and similarly no benefit of repayment of housing loan is available as deduction under section 80C.”

    S. Vasudevan, Executive Partner Lakshmikumaran and Sridharan Attorneys stated “The new tax regime is not beneficial in any way to homebuyers as compared to the old tax regime. Deductions towards repayment of principal and payment of interest towards housing loans under section 80C and 80EE/ *80EEA* are available only under the old regime. Also, deduction towards interest paid on loans for self-occupied property under section 24(b) can be claimed only under the old regime. As these deductions are not available under the new regime, homebuyers may decide to continue under the old regime to avail these benefits.”

    Neelabh Sanyal, COO, Kuvera stated “The new tax regime is designed to be easy and leaves extra disposable revenue within the hand of tax payers. However, the deductions focused in the direction of dwelling purchases usually are not accessible within the new regime. This is more likely to cut back investor demand for actual property, thereby making properties cheaper. So whereas the New Tax regime does not provide any deductions that inspired dwelling shopping for, not directly serving to comparatively inelastic consumption demand.”

    CA Vitesh Waikar, Sr. Tax Consultant at Fintoo said “Though the government has tried to make the new tax regime extremely attractive for salaried individuals by increasing the limit of non-taxable income, but apart from it if the same individual is looking to claim any deduction of interest and principal amount paid for a home loan under the new tax regime, then unfortunately, it won’t be possible as the new tax regime does not offer any kind of deductions or exemptions for home loans as of now.”

    The views and suggestions made above are these of particular person analysts or broking corporations, and never of Mint.

     

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