Additional Tax Benefit for first-time home buyers

By Jay Dee Infra In Tax Benefit No comments

Additional Tax Benefit for first-time home buyers

There’s now greater incentive to buy an affordable first home. Effective April 1, first-time buyers will get an additional tax benefit of Rs 50,000 on taking home loans that do not exceed Rs 35 lakhs.

  • Rs 50,000/- Additional Tax Benefit for First Time Home Buyers
  • Applicable on loan amounts of upto 35 Lakhs, sanctioned during the period from 1st April 2016 to March 31, 2017 and taken for a house property of value less than 50 Lakhs
  • Benefit of deduction to be extended till repayment of loan continues
  • This deduction will be over and above the limit of Rs 2 Lakh provided for a self occupied property under section 24
  • Will apply in relation to the assessment year 2017-18 and subsequent years

First-time home buyers, from April 1, 2016, will get additional tax benefit for purchase of residential properties of value up to Rs 50 lakh.

The government’s proposal, which comes into force in the new financial year, is aimed at promoting its ‘Housing For All’ scheme and bolstering the real estate sector, which is facing a slowdown for the last three-four years.

The Finance Bill 2016, which is likely to be approved by parliament during the second half of the budget session, provides for up to Rs 50,000 tax benefit to first-time home buyers. This incentive is proposed to be extended to a house property of a value less than Rs 50 lakh, in respect of which a loan of an amount not exceeding Rs 35 lakh, has been sanctioned during the period from April 1, 2016 to March 31, 2017.

“In furtherance of the goal of the government of providing ‘Housing For All’, it is proposed to incentivise first-time home buyers availing home loans, by providing additional deduction in respect of interest on loan taken for residential house property from any financial institution up to Rs 50,000. It is also proposed to extend the benefit of deduction till the repayment of loan continues,” said the bill, presented to parliament by finance minister Arun Jaitley.

Additional-Tax-Benefit-for-first-time-home-buyers-from-April-1st

The proposed deduction is over and above the limit of Rs 2 lakh provided for a self-occupied property under section 24 of the act.

According to Getamber Anand of the realtors’ apex body, CREDAI, the tax incentive will encourage first-time home buyers and increase demand significantly.

After the Finance Bill is passed by parliament, the amendments in this regard in the Income Tax Act will take effect and will apply in relation to the assessment year 2017-18 and subsequent assessment years.

With a view to incentivise the affordable housing sector, the bill also proposes to amend the act so as to provide for 100% deduction of the profits of an assessee who is developing and building affordable housing projects, if the project is approved before March 31, 2019.

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