2 min read
25 May 2021

Instead of buying a home, why not build a home exactly as per your specifications? You can design each room to your liking instead of settling for less. To put your plans into action, you can make use of a home construction loan. Unlike regular home loans, you can access funds from the total sanctioned amount in phases when taking a home construction loan. It is typically based on your construction requirements and progress.

When you take a Home Construction Loan from Bajaj Finserv, you only have to pay interest on the funds you use, not the entire loan amount. Besides, if you meet all the eligibility criteria, Bajaj Finserv approves your application within minutes. Apart from ease of use and flexible repayment terms, this home loan variant also offers you home loan tax rebates that can help you save more.

Here are the sections under which you can enjoy home loan tax benefits.

Section 24

You can claim deductions on the interest you pay on your home loan under Section 24 of the Income Tax Act. A maximum deduction of Rs. 2 lakh is allowed in the case of a self-occupied property. However, you can claim this deduction only if the construction of your home completes within 5 years from the time you take the loan. If not, then you can claim only Rs. 30,000. If you are not occupying the property for which you have taken the loan, there is no limit on the amount you can claim as exemption under this section, regardless of completion status.

Additional Read: How do a Home Construction Loan work

Also, even if you pay interest on the home loan while construction is underway, you can claim exemptions only after the construction of the house is complete. You can do so in 5 equal installments in consecutive years.

Section 80C

You can claim exemption on the principal amount of your home loan under section 80CX. Here you can benefit from a tax deduction of up to Rs. 1.5 lakh. But, you can avail this benefit only after the construction of the property is complete. Also, if you sell the property within 5 years of possession, the benefit will get reversed. The amount you claimed will be added back to your income in the year you make the sale.

Section 80EE

You can claim an additional deduction of Rs. 50,000 per financial year towards interest payments if you are a first-time homebuyer. You can claim this benefit under Section 80EE of the Income Tax Act. In this case, the total value of the home loan must be under Rs. 35 lakh and the home’s value must be under Rs. 50 lakh. Besides, you can avail this deduction over and above the benefits that other sections offer.

Also, if you are thinking about tax planning, consider taking the home loan jointly, as this way both of you can claim home construction loan tax benefits. The only thing to remember is that your co-applicant must be a co-owner too. So, plan and reap the rewards that your home loan has to offer!

Additional Read: Benefit of Co Applicant in Home Loan

Bajaj Finserv brings you pre-approved offers for personal loans, home loans, business loans, and a host of other financial products. Not only does this simplify the process of availing of financing, but it also helps you save on time. All you have to do is share a few basic details and check out your pre-approved offer.
 

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Frequently asked questions

What is the difference between the old and new tax regimes calculation for home construction loans?

To understand the difference between old and new tax regime for home construction loans, consider the variations in allowable deductions and tax benefits under each regime. The old regime offers more exemptions and deductions, while the new regime simplifies the process with lower tax rates but fewer deductions.

How do the old and new tax regimes affect tax benefits on home construction loans?

To see how tax benefits on home construction loans vary, use the income tax calculator old vs new for a detailed comparison. The calculator helps you understand which regime is more beneficial based on your income and eligible deductions, aiding in better financial planning.

What are the standard deductions applicable to home construction loans in the new tax regime?

To know the standard deduction in new tax regime for home construction loans, explore the specific deductions available under the new regime. While the new regime limits several deductions, understanding the applicable ones can help you optimise your tax savings and make informed financial decisions.

How do I access the income tax portal to check tax benefits on my home construction loan?

You can access the income tax login portal to check tax benefits on your home construction loan and manage your tax details. The portal allows you to view your tax history, file returns, and stay updated on any changes, ensuring you maximize your benefits.

How can I file my income tax return to claim tax benefits on my home construction loan?

Learn the steps for ITR filing to claim tax benefits on your home construction loan, ensuring you maximise your eligible deductions. Proper filing helps you take advantage of all available benefits, reducing your taxable income and enhancing your financial stability.

How can I check the status of my income tax refund related to my home construction loan?

To check the income tax refund status for your home construction loan, visit the provided link and follow the necessary steps for updates. Monitoring your refund status ensures you receive due refunds promptly, aiding in effective financial management and planning.

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