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Balwant Jain

Tax and Investment Expert ,

What are the tax benefits for home loan

 

Questions Answered

Q

guest: I want to buy an house in Bangalore (2BHK) which will cost approx 80 Lakhs. My Monthly Net income in 70K and i invest 25K per month in various SIP and PPF plan. Should i go for House or shall i wait ? Please suggest. My total investment till date is 5 Lakhs. My age is 31 years. Married. No kids.

Balwant Jain: One should buy a house one when has decided to settle in a particular city and he has been able to save enough to pay for the margin money required as down payment. For a house of 80 lakhs you will have to pay 16 lakhs as your own contribution. Additionally you also will have to pay for stamp duty etc. so unless you are able to save that much money you can not buy a house.
Q

guest: I am about to sell my house. Deal is for 34.5 Lak. The purchaser want to show 39 lak while registering the property so that he could get full loan for 34.5 lak registration charges. I believe, once I deposit the DD in my bank account, TDS will be deducted. In this case, if I agree to show 39 lak during registration, I would end up paying tax for 4.5 Lak, which I actually do not posses. How much is the tax for that 4.5 lak? I\`m also thinking about the option to get the tax amount for 4.5 lak from the purchaser, so that both of us are not affected. Pls advise. By the by, after I deposit the DD amount of 34.5 lak in my savings ac, I will either go for a Fixed deposit or will withdraw that money for purchasing a land. - Lavin (36 yr, Male, Salaried)

Balwant Jain: First of all I do not approve of such fishy deals. Do not induldge in such transactions. The tax on the differential amount of 4.50 Lakhs would be 90,000/- presuming your house is being sold after two years when tax is 20% of the profit. Please not you will have to pay capital gains on sale of your house. I would advise you to seek help of an experienced tax professional.
Q

guest: Hello Sir, I have one query regarding Home loan. I have purchased a Ready to shift home in July 2020 while taking a loan of Rs. 36 lakh from HDFC Limited. I am a Central Govt employee and getting rebate of the home loan. However, there is one clause (Swamy Hand Book) that Home loan amount for a govt employee can\`t exceed Rs. 35 lakhs. At that time, I didn\`t notice that and took the loan, and now the Outstanding balance is reduced to somewhere around 27 lakhs. When I submit the IT certificate for claiming the rebate, the loan amount of Rs. 36 lakh appears in that certificate. Is there any chance that the office people will cut off my rebate in the case they will say that your loan amount has been exceeded 35 lakh. Please assist in this regard.

Balwant Jain: I am not aware of any such rule about restriction on maximum amount up to which a person can avail home loan. Even if there is such rule in service rules, there is no restrictions under the income tax laws about the maximum amount of home loan one can avail, you even if your office withdraws the benefit of home loan, you can still claim the same while filing your ITR.
Q

guest: Can you please suggest what do I look forward to when I consider home loan options ? In the sense of a 40 Lakh rupee loan for a period of 15 years, is this an ideal scenario or do I increase the period to payback ?

Balwant Jain: Initially one should opt for a longest home loan tenure which is available as one can always prepay the home loan without incurring any additional cost as the loans are generally given under floating rate regime where bank and Housing finance companies are not allowed to levy any penalty for prepayment of home loan. While taking home loan, you should prefer a lender who revises the interest rate as and when the market rate changes. This can happen if you borrow from a lender who gives you home loan linked to external rate. Presently all banks have to lend under externally benchmark lending rate. Housing finance companies re not under such compulsion. The rate of interest being charged should be the main criteria in addition to the bench marking of the rate while taking a new home loan.
Q

guest: I had a question. My builder has a 30:40:30 scheme for the property. The property if of 80L and will be complete in 4 years (48months) 30% - First 6 months 40% - At the 3rd Year 30% - On possession (Af 4th year) I wanted to avail home loan. As per my understanding the bank finances upto 80% of the amount (maybe 85% in special cases). My questions is 1. Do I need to pay the bank the 20% (16L) amount upfront even if the bank will be dispersing 30% (24L) of the amount to the builder or do I need to pay 20% of the 30% i.e. 4.8L? 2. I can only manage upto 10% of the downpayment, are there other legal options provided by financial institutes or is there some other way that the 30% payment can be streamlined?

Balwant Jain: For a home loan whether for a ready to move in or an under construction property, the bank will only disburse any money after you have paid for your full share in the property. so unless and until you pay whole of your contribution, the bank will not pay any money to the builder. As per my knowledge there are not other option except to raise the balance money from your friends and relative or by sale of your investments. In case any of you wish to get your query answer, please mail me at jainbalwant@gmail.com
Balwant Jain: Thank you everyone. In case any of you wish to get your query answer, please mail me at jainbalwant@gmail.com
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