Tax Benefits For Construction Properties | Tax Benefits
For Home Loans
Preparedtopurchaseapropertythatisstillbeingbuilt?Discoverthecappedamount, termsthatapply,andunder-constructionpropertytaxincentivesbasedonvariouspartsof theITAct1961.Themajorityofunder-constructedpropertiesareofferedatadiscountof between15and20%.Whencomparedtohomesthatarereadytomoveinto,these propertiesarelessexpensive.Additionally,didyourealisethattherearetaxbenefitswhen youassumeownership?
Are searching for 2 bhk flat for sale in bandra?
Youmustthinkaboutrentingaunitinanongoingconstructionprojectifyouhavealimited budgetandnoimmediateintentionstomovein.Suchpropertiesmaybeadvantageousfor thoseseekingmortgageswhoareemployed.Upontakingpossession,theymayapplyfora propertytaxrebateforunder-constructionproperties.Thesetaxadvantagesareprovided bySections24B,80C,&80EEAoftheIncomeTaxActof1961.Tofindouthowthistax deductionfunctions,continuereading.Youcanalsofindoutwhatrestrictionsapplytosuch claims.
Income Tax Act of 1961 Sections 24B, 80C, & 80EEA
HerearethesectionsoftheITActthatprovidepropertytaxincentivesforbuilding.
Section24BoftheITActof1961providesanunder-constructionpropertytax deductionofuptoRs.2lakheachfiscalyear.Theinterestrateonamortgagecanbe reducedtoaccountforthissum.
Section80CoftheITActof1961providesataxdeductionforunder-construction realestateofuptoRs.1.5lakheveryfiscalyear.Youcandeductthissumfromyour paid-offmortgage'sprinciple.
Section80EEoftheITActof1961allowsforanadditionaltaxdeductionofRs. 50,000onhomeloaninterestpaidaftertheSection24Blimithasbeenreached.This advantagerelatestounder-constructionpropertytaxbenefits.
ITActof1961,Section80EEA:InaccordancewithSection80EEA'sbenefitsfor under-constructionproperties,thetaxpayermaydeductanadditionalRs.1,50,000 intaxesfromtheamountofhouseloaninterestpaidaftertheSection80Climithas beenreached.
AlloftheseITActSectionsprovideforunder-constructionpropertytaxincentives,butonly underparticularsituations.Formoreinformation,readthecompletearticle.
Benefit from Under-Construction Property Taxes under Section 24B of the IT Act of 1961
AtaxpayerisentitledtoadeductionofRs2lakhsfortheinterestpaidonthemortgage usedtobuythehomeundertheIncomeTaxActof1961.Onlyifthetaxpayerhasphysical possessionofthehomeduringtheyearanditistheirsinallotherrespectsaredeductions allowed.UnderSection24,apropertythatisstillbeingbuiltisnoteligibleforatax deduction.Onlyaftertheconstructionisfinishedandthetaxpayerhaspossessionisit permitted.
AtaxpayerisonlypermittedtodeductuptoRs.2Lakhininterestthroughouteachfiscal year.Thisfunctionsasacombinedlimitforthatyear'sinterestplusone-fifthoftheinterest fromtheconstructionperiod.
Duringthepre-constructionphase,buyershavetheoptionofpayingsimplytheintereston theloan.Oncethepropertyistakenintopossession,thetrueEMIbegins.However,let'ssay youbeganmakingregularEMIpaymentsbeforetheprojectwasfinishedinordertopay backtheloanamountinashorteramountoftime.Inthatsituation,theprincipal repaymentyoumadeonthepropertywhileitwasstillunderconstructionisnot deductible.
How to Figure Out the Pre-Construction Period
for Tax Benefits on Home Loans
Thepre-constructioneramustbedeterminedinordertoqualifyforunder-construction propertytaxbenefits.
Step 1: Findthedateonwhichyourmortgagebegan.
Step 2: GetthestartdateofyourhomeloanEMI
Step 3: Discoverthedaythatthebuildingwasfinishedandyoutookcontrolofthe property.
Step 4: Writedownthelastdayofthefiscalyearthatcamebeforethepurchaseofthe propertyorthecompletionofconstruction.Ifyouhaven'tstartedpayingmortgageloan repayments,thisappliestoyou.
TheEMIstartdatewillberegardedastheconclusionoftheconstructionperiodifyou beganmakingpaymentspriortopurchasingthehomeortheproject'scompletion.
Step 5: Thepre-constructionperiodisthetimeframefromthebeginningofthehomeloan totheconclusionofthebuildingperiod.
AccordingtoSection24B,youareeligibleforapropertytaxbreakonunder-construction propertiesequaltothetotalamountofhomeloaninterestyouhavepaidduringthistime. Youmustdividethissumbyfiveandsubmiteachportionasaseparateclaiminthenext fiscalyear.Whensubmittingyourincometaxreturnforthemostrecentfiscalyear,you maydeductthisamountforhouseloaninterestunderSection24B.
Important Information Regarding the Section 24B Home Loan Tax Benefit
HereareafewmoreessentialdetailsabouttheSection24Bpropertytaxcreditforunderconstructionproperties.
Pre-constructionperiodinterestandcurrentyearinterestarebothincludedinthe maximumunder-constructionpropertytaxbenefitamountofRs.2Lakh.
Onlyiftheproperty'sdevelopmentisfinishedwithinfiveyearsafterthelastdayofthe fiscalyearinwhichthemortgagewasborrowedistheunder-constructionpropertytax advantageapplicable.
Thetaxpayermaydeductallofthehomeloaninterestpaidduringthepre-construction phaseinonelumpsumiftheloanandEMIstartdatesfallwithinthesamefiscalyear.Itis notessentialtomakethesameclaimthroughoutfiveyears.
Tax Benefit for Properties Under Construction Under Section 80C of the IT Act of 1961
Immediatelyfollowingtheconclusionofthepre-constructionperiod,Section80CoftheIT Actcomesintoplay.Thisissothattheconstructionworkcanbefinishedbeforeyoumake anymainpaymentsonyourmortgage.
Theunder-constructionpropertytaxbenefitofuptoRs.1.5lakheachfinancialyear, however,canbeclaimedoncethepre-constructionperiodhasended.Thesehomeloantax benefitswillbelostifyousellthepropertywithinfiveyearsofthelastdayofthefiscalyear inwhichyoutookpossession.
Thetaxbenefitmustbeclaimedwithinthesamefinancialyearthattheexpenseswere incurred,accordingtoSection80CoftheIncomeTaxAct.
Under-Construction Property Tax Benefit under Section 80EE of the IT Act of 1961
IfthespecifiedlimitofRs.2LakhunderSection24Bhasbeenreached,Section80EEofthe IncomeTaxActprovidesanadditionalunder-constructionpropertytaxcreditofRs.50,000 perfiscalyearonhomeloaninterestrates.
Iftherequirementslistedbelowaremet,thetaxdeductionallowedbythisprovisionmay beclaimed.
Homeloansobtainedinthefinancialyears2013–2014,2014–2015,2015–2016, and2016–2017areeligibleforthetaxbenefit.
Theonlypeoplewhocantakeadvantageofthistaxbreakonunder-construction propertyarefirst-timeindividualhomebuyers.
Toqualifyforthistaxcreditonpropertythatisstillunderconstruction,thevalueof theassociatedpropertycannotbegreaterthanRs.50lakhs.
Toqualifyforthistaxincentiveonunder-constructionhouse,themortgageamount cannotexceedRs.35Lakhs.
Themortgageonthepropertythatisstillunderconstructionmustbeapprovedbya recognisedfinancialinstitution.
Under-Construction Property Tax Benefit Under Section 80EEA of the IT Act of 1961
IfthegivenlimitofRs.1.5LakhunderSection80Chasbeenreached,Section80EEAofthe IncomeTaxActprovidesanadditionalunder-constructionpropertytaxbenefitofRs. 1,50,000eachfinancialyearonhouseloaninterestrates.Iftherequirementslistedbelow aremet,thetaxdeductionallowedbythisprovisionmaybeclaimed.
Thetaxbenefitisavailableforhouseloanstakenoutduringthe2019–20,2020–21, and2021–22fiscalyears.
Onlyfirst-timeindividualhomebuyersareeligibleforthistaxbreakonproperty thatisstillunderdevelopment.
Toqualifyforthistaxbreakonunder-constructionproperty,thetotalamountofthe stampdutypaymentsmadecannotexceedRs.45lakhs.
Thecarpetareaofthehomemustbemorethan645squarefeetforhousesinmajor cities.
Thecarpetareaofthehomemustbemorethan968squarefeetforhomesinother cities.
Section80EEprohibitstaxpayersfromclaimingataxcreditforpropertythatisstill beingbuilt.
The Bottom Line on Property Tax Benefits from Under-Construction
Youmayeasilytakeadvantageofthesignificantunder-constructionpropertytax incentivesnowthatyouareawareofthemall.Whensubmittingaclaimagainstunderconstructionpropertytaxbenefits,besuretofollowthecorrectprocedure.Tosubstantiate theinformationyousupplyinthetaxclaimform,youmightberequiredtoprovidespecific documents.Thesedocumentsrequireupdatingwithyourmostrecentinformation.This makesiteasierforauthorisedpersonneltoeasilychecktheinformationgivenandquickly approveyourtaxdeductionrequest.
You’re looking for Projects in Vikhroli we have the Best Properties In Mumbai Like Ready to Move:https://navimumbaihouses.com/properties/search/vikhroli/
If you want daily property update details please follow us on Facebook Page / YouTube Channel / Twitter