As an individual, owning your own home adds to your financial and emotional wellbeing.
What You Need to Know About the Housing Loan in 2022
As an individual, owning your own home adds to your financial and emotional wellbeing. But, while looking for the best ways to finance this big-ticket purchase, you may have encountered a vast array of home loans by now. It may become challenging to make an informed choice among all these options. Therefore, we will discuss everything you need to know about housing loans in 2022 before it becomes a missed opportunity for you.
Deduction Eligibility
You are not the only one who is eligible for a housing loan deduction. If you have taken a loan from friends and family, you can avail of tax benefits on the interest paid. Now, if you've taken a personal loan from your employer or a private investor, it is also eligible for deduction. However, the principal amount remains out of limits for deductions. To obtain approval for housing loan deductions on a loan borrowed from an employer, investor, or friend, you must have a certificate proving that you've paid off the interest only loan(for at least five years).
Consider the Cheaper options
If you are planning to purchase an apartment, it is highly recommended to opt for an under-construction one. They are not only comparatively cheaper but also allow you to claim the total interest paid during the pre-possession period. You can claim a maximum of 2 Lakh INR per year if the house is purchased for self-occupancy. You are eligible for an additional interest deduction of 1.5 Lakh INR if the purchased apartment happens to be your first house purchase!
Switching Lenders
No matter how many home loans you have taken, it is always possible to switch lenders in the future. Banks do not charge any prepayment penalties today. While there may be a few hidden charges by banks, you can still make big savings on switching lenders.
Joint home ownership
You can purchase a house jointly for higher tax and loan benefits. Joint home loans are most common among spouses, siblings, and children. All co-borrowers can claim a deduction of INR 2 Lakh from income tax from the interest paid by each of them on their housing loan every year. This number is subject to change with respect to the prevailing tax rules.
Loss incurred from a house property
If you incur a loss on any of your house properties, the total loss can be adjusted against any other income source. This is currently capped at 2 Lakh INR. In addition, the interest that could not be set off against the heads of income is eligible to be carried forward for up to 8 assessment years. Such set-off is only allowed against the income derived from your house property. Make sure to let out your house on rent to avoid this surplus set-off becoming a sunk cost.
Getting a housing loan becomes easier if you stay prepared with these quick suggestions in mind. From the very first step to having your home loan sanctioned, it's important to maintain transparency, have detailed paperwork ready, and choose your lender wisely!
