The new budget, Budget 2017, has been announced by Finance Minister Arun Jaitley. According to the provisions of the new budget, many sectors are seeing changes in terms of lower tax rates or increased spending by the government. But what has changed for home loans? Here are the highlights on home loans post Budget 2017.
- The maximum amount that can be claimed as deduction for a self-occupied house, under section 24(b), is Rs.2 lakhs. This deduction applies to the interest being paid for the home loan.
- For those who own a second house, can save up to Rs.2 lakhs per year in taxes by setting off that property towards loss under Section 71 of the IT Act. Earlier, there was no limit on such set-offs. For the second house, tax on the deemed value of the house will be applicable irrespective of the house being occupied.
- If a loan is taken as a joint home loan with a spouse, both loan applicants are eligible for tax benefits up to Rs.2 lakhs.
- Housing loans taken from sources other than banks and NBFCs, e.g. friends, employers and private lenders can also be considered for tax benefits, by the IT department, if the lender provides a certificate for the loan.
- Pre-construction interest paid for a home loan is eligible for tax deductions under Section 24. Such deductions can be claimed in 5 yearly instalments starting from the year in which the property is completed, provided it’s completed within 5 years.
By and large, not much has changed for home loans as a result of the new budget.