Can buying a ready to move-in home have any financial benefits over buying an under-construction property? The answer is – yes. Although, an under-construction property may comparatively fall a bit cheaper but the fact is that certain income tax benefits are only exclusive to ready to occupy properties.
Here are the income tax benefits that can be obtained only from a ready to move in home:
Income tax benefit on the principal paid:
If you buy a completed house that is ready for immediate possession, then you can save Rs. 1.50 lakhs. This pertains to the deduction for the home loan’s principal amount paid, as per section 80 C of the Income Tax (IT) Act.
Income tax benefits on the loan interest:
As per section 24(b) of the IT Act, the deduction allowed for the loan interest paid for your first home is up to Rs. 2 lakhs. This can be applied only if you buy a ready to move in-house and is self-occupied. While, if the property is given out on lease or not self-occupied, then there is no limit to the deduction amount. This means that the entire loan interest paid can be claimed. Whereas, if you buy an under-construction property you still can claim the amount paid as interest, provided the project is completed within 5 years since the loan initiation. If the home is not ready by 5 years, then your tax benefit may reduce to just Rs. 30,000 from Rs. 2,00,000. Secondly, the total interest amount cannot be claimed at once if you buy an under construction property. It has to be claimed in 5 instalments and is disbursed to you over a period of 5 years, starting from the year the house was handed over to you.
Income tax benefit on GST:
If you buy a house whose completion certificate has already been issued i.e. it is ready to occupy, then no GST is charged at all provided that the entire consideration has been paid to the builder. This is as per the CGST Act, 2017; section 5(b) of schedule II to be precise. While, if only a part of the consideration has been paid before the 1st of July, 2017 due to the property being under construction, then 4.5% of service tax shall be applicable. Whereas, for any under construction property bought after the 1st of July, 2017, GST chargers @12.36% are inevitable.
So why wait to live in your dream home? Make the most of these tax benefits right now. Visit Aparna Constructions and choose from our entire range of ready to move in apartments and villas we have in store for you.