News: Buying a home under Rs 45 lakh? Budget just brought you some major cheer-02-02-2021
Synopsis
If you are seeking to buy a home worth Rs 45 lakh and going to take a loan of Rs 40 lakh for the purchase, the rebate that you'll get will cover the whole interest amount you have to pay in a year
In Budget 2021, Finance minister Nirmala Sitharaman chose to bring some major cheer to prospective buyers of aordable homes. Homes valued under Rs 45 lakh fall under the aordable category. The budget extended by one year the provision of deduction up to Rs 1.5 lakh in interest on loans taken for the purchase of house under aordable residential property category. The deduction from taxable income under section 80EEA will now be valid up to March 31 next year. There is only one rider attached: to avail this benet, you must not own any other residential property as on the date of saction of the loan.
This is over and above the Rs 2 lakh deduction against interest paid on a home loan taken to buy a house under Section 24 of I-T Act. This means, in total you can avail rebate on Rs 3.5 lakh interest paid on your home loan. If you are seeking to buy a home worth Rs 45 lakh and going to take a loan of Rs 40 lakh for the purchase, the rebate that you'll get will cover the whole interest amount you have to pay in a year. If you come in the 20% tax bracket, this new budget move will reduce your eective interest rate to around 5.5 per cent from the current 7 per cent. On the EMI side, the monthly payable amount on a Rs 40 lakh loan will be around just Rs 26,000 when one adjusts for the new rebate. The move has sparked enthusiasm in the real estate sector, which expects a surge of new demand in the aordable segment.
