Home is the biggest dream of everyone's life. We all want to have a home where we feel safe and enjoy life with our family. But it's not an easy dream to achieve. The prices of land and buildings are rising. In such a situation, the biggest challenge before first-time home buyers is money. Keeping this in mind, the government has made many special schemes for first-time home buyers. These include tax benefits and exemptions. These reliefs make it a little easier for the common man to buy a house.
Why is tax and duty relief important?
Nowadays, property costs are rising quickly. Buying a house is a tremendous duty and speculation, particularly in huge cities. Individuals who are buying a house to begin with frequently do not have much investment funds.They depend on their salary from their job or income from small business. In such a situation, they have to take a home loan from the bank.
It is not easy to pay EMI every month after taking a loan. EMIs take up a large part of the income and it becomes difficult to meet the rest of the expenses. The government provides tax rebates to reduce this burden. A tax deduction means that your income will be taxed less. This will save more money in your home buyer tax rebate.
Similarly, stamp duty and registration fees have to be paid while buying a house. This could run into lakhs of rupees. If first-time homebuyers get discounts on these, it becomes even easier for them to buy a home.
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What are tax rebates?
The government has made several provisions in the Income Tax Act that benefit first-time homebuyers. These provisions have been specially made for them so that they can buy houses without much burden.
Exemption under Section 80C
If you have taken a home loan from the bank, you can take a tax deduction on the principal payment of the loan. A deduction of up to 1.5 lakh every year is available under Section 80C. This amount is deducted from your taxable income. This means that you will have to pay less tax.
Exemption under Section 24B
The interest paid on home loans is also tax deductible. Under Section 24 (b), you can get a rebate of up to 2 lakh. This makes repaying the loan easier.
Benefits of Section 80EE and 80EEA
The government has given additional relief to first-time home buyers. If your house is within the range of 45-50 lakhs and the loan is up to 35 lakhs, then you can get an additional discount of up to 50,000. Section 80EEA also provides special tax benefits on eco-friendly and affordable homes.
What are duty caps?
At the time of buying a house, not as it were the cost of the house has to be paid, but moreover stamp obligation and enlistment expenses have to be paid. This sum can run from 6% to 9% of the add up to the cost of the house. Stamp duty usually ranges from 5% to 7%. The registration fee is around 1% to 2%. Paying such a large amount can be difficult for first-time homebuyers. Therefore, the government has imposed duty caps in some states. This means that first-time homebuyers will not have to pay stamp duty and registration fees beyond a limit.
In many states, special concessions are given for women. For example, in some states, if the house is bought in the name of a woman, then a discount of 1% is given in stamp duty. This gives encouragement to women and also reduces the financial burden of the family.
Who will benefit?
The government has not extended the benefits of these exemptions and duty caps to all. Some conditions have also been kept for this.
- Only first-time homebuyers can avail of this discount.
- The price of the house should be within the limit fixed by the government, like 45 lakhs or up to 50 lakhs.
- The buyer must not already have a home.
- The loan should be taken from a recognised bank or financial institution.
- If you meet these conditions, you can get both tax exemption and duty relief.
Benefits for first time home buyers
Economic relief
A home is a huge investment. When taxes and duties are waived, it becomes easier to repay the loan. The burden of EMI is reduced and the family can also meet other important expenses.
Motivation to buy a house
Many people prefer to rent because they are afraid to buy a house. But when the government gives such concessions, people get confidence. They think it's possible to take it home now.
Benefit to real estate sector
When more people buy houses, the real estate sector also gets a boost. Builders, construction companies and labourers all get employment. It will also benefit the country's economy.
Let's understand with an example
- Suppose a person buys a house worth Rs 40 lakh and takes a home loan of Rs 30 lakh from the bank.
- A deduction of Rs 1.5 lakh under Section 80C is available on the principal amount of the loan.
- A deduction of 2 lakh will be available from Section 24 (b) on the interest of the loan.
If this person is buying a house for the first time and the price of the house is less than 50 lakhs, then he can also get an additional rebate of 50,000 from Section 80EE. This will save a lot of tax every year. If the duty caps are also applicable in the state, then there will also be relief in stamp duty and property tax rebate.
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Special concessions to States
Different states in India have different rules for homebuyers.
- Delhi- Exemption on stamp duty for women.
- Maharashtra- For first-time home buyers, the registration fee is lower.
- Tamil Nadu- Stamp duty cap on affordable homes.
- Uttar Pradesh - Tax exemption and subsidy with Pradhan Mantri Awas Yojana.
The citizens of the states get a lot of benefit from these schemes and they are able to decide to buy a house quickly.
Things To Consider When Buying A House
- Although tax exemptions and duty caps are very helpful, there are other things to keep in mind when buying a home.
- Compare the loan rates of different banks and choose the most reasonable option.
- Check all the legal documents of the property properly.
- Assess how much the EMI burden will affect your monthly budget.
- If possible, buy the house in the name of the woman to get an additional land transfer tax rebate.
Future prospects
The government is constantly bringing new policies so that every citizen has his own house. Schemes like tax rebates and duty caps are a strong step in this direction. In the coming time, it is expected that more schemes will come up so that middle class and lower income group people can buy houses easily.
Conclusion
Buying a home for the first time is an important step in life. The tax exemptions and duty caps offered by the government are a big help in turning this dream into a reality. This reduces the financial burden of the buyer and makes it easier to buy ahouse. If you are the first time If you are thinking of buying a house, then take full information about these concessions and make a wise decision.
