The idea of a dream home differs from person to person, but what’s common for everyone is the desire to own their own abode. For many people, it serves as more than just a resource and they perceive it as a source of pride, love, safety, and stability. When it’s your first home, this feeling gets amplified by a thousand folds. To help a first-time house buyer, the Government has taken a few steps, including tax discounts, subsidies, and programs to promote their purchase decision and support them with housing finance.
Here, we bring to you several benefits that you can enjoy if you’re buying a house for the first time-
On the principal amount portion of home loan EMIs, tax benefits of up to Rs. 1.5 lakh can be claimed. However, it is to be noted that only properties whose construction is finished and which have been owned for at least five years are eligible for this deduction.
First-time homebuyers who are paying interest on their mortgage may also be able to deduct that interest up to a limit of Rs. 2 lakhs, annually. This only applies if the home is privately owned and not rented.
Section 80EE & 80EEA
In addition to the tax advantages provided by Section 24, the purchasers may also receive an additional tax benefit of Rs. 1,50,000 on interest repayment. In Union Budget 2019, a new section- 80EEA, was included. This clause increases the tax benefits on interest repayment for a home loan under “affordable housing” to up to Rs. 1.5 lakhs provided that the carpet area of the property must not exceed 60 square metres (645 sq. ft.) for metro cities and 90 square meters (968 sq. ft.) for other towns and cities. This can be utilized only if a buyer is not eligible for Section 80EE benefits.
Prior to 2016, only self-occupied buildings whose construction or acquisition occurs within 3 years of the loan’s sanction date, were eligible for the tax benefits. Since the 2016 budget, this has been relaxed to 5 years in accordance with Indian real estate trends.
Real Estate Regulation Act (RERA)- 2016
RERA benefits homebuyers in a variety of ways, including data transparency on construction projects from builders, standardized measurements for a property (such as carpet area), defined and enhanced buyer rights, insolvency restrictions, and more. It controls the builders’ misconduct and regulates the industry to raise the stakes for the buyer.
Pradhan Mantri Awas Yojana (PMAY)
It provides financial assistance to first-time homebuyers from lower- and middle-income groups (maximum family income Rs.18 lakhs). The principal amount’s subsidy rates vary depending on the income.
GST on Housing Subsidy
On houses purchased through the PMAY, a 12% GST was imposed. In 2018, it was reduced to 8%. This means that, instead of the previous benefit amount of Rs. 2.5 lakhs, a first-time home buyer with a household income of Rs. 18 lakhs, has now become qualified for a benefit of up to Rs. 2.7 lakhs.
New Income Slabs for Subsidy
For the housing loan subsidies under PMAY, two new income slabs have been implemented. A 4% interest subsidy on Rs. 9 lakh principal amount is offered to buyers with an annual income of Rs. 12 lakhs or below. The second is a 3% subsidy on a principal sum of 12 lakh rupees for people making upto 18 lakh rupees, annually.
As a result of shifting economic trends, both the real estate market and consumer purchasing patterns have undergone significant changes. However, no one can deny that a house is still a valuable purchase for every Indian, especially the first one. With a little research and consultation from a professional, a first-time buyer can enjoy the benefits provided by different schemes and services , and give shape to the house of their dreams.
Achyut Group is a trusted brand due to its ethical values among the customers, vendors and competitors. We believe in creating environment friendly green buildings by conserving energy, water and wood. The promoters of Achyut Group combine over 20+ years of experience in the construction legal, finance and marketing sector.