Decoding tax benefits on interest on Loan against Property

If you have taken a home loan to buy a house, your interest outgo can help you save on tax. Let’s find out how.

The quantum of tax benefits that can be claimed depend upon whether you live in the house property or it has been rented out. It is worthwhile to note that all these tax benefits can be available where the construction of the house property has been completed.

These are not available for a property which is under construction. However, interest that belongs to the pre-construction phase is allowed to be claimed based on certain conditions.

For Self Occupied House Property:  The maximum tax benefit for interest on a home loan is restricted to Rs. 2, 00,000 whether you live in the house yourself or whether it is lying vacant. The same cap applies if your parents, spouse or children live in the house, or if you leave the house vacant. This deduction is available under Section 24 of the Income Tax Act. Please note that the loan must have been taken for purchase or construction of a house property. If loan has been taken for repairs or reconstruction of a property your interest deduction shall be limited to Rs. 30,000. Also, the purchase or construction must be completed within 3 years from the end of the financial year in which the loan was taken. You need to show the interest payout for the financial year under the head ‘income from house property’ in your income tax return. This loss that arises due to interest shall be adjusted against income earned by you under other heads such as salary or income from other sources. Any unadjusted loss can be carried forward for eight assessment years in your return and set off against house property income in the subsequent years.

For Rental Property: If you have let out the house for which you have taken a loan, you are allowed to claim the entire interest against the rental income. You can also reduce property taxes paid by you. From the net value, which is rental income less property taxes, a standard deduction of 30% (of net value) is allowed to be claimed. Also, the entire interest payment is allowed to be adjusted from such net value. Therefore, rental income less property taxes less 30% standard deduction less interest on home loan shall be your income (or loss) under the head house property. Similar to loss on a self-occupied house property, this loss can be adjusted against other heads of income and carried forward to 8 years when not adjusted fully.

Pre-construction Interest Pre-construction interest is allowed in 5 equal installments, starting from the year in which the house is purchased or the construction is completed. Accumulate the interest outgo for the years before the financial year in which construction was completed, and claim it along with the interest for the current financial year. Do note that pre-construction interest is included within the overall limit of Rs. 2, 00,000 for a self-occupied house and only a fifth can be claimed each year.

How to claim Interest Deduction You can claim this deduction at the time of filing your return if you have not informed your employer about it in a timely manner. Here are the details and documents you will need to claim interest deduction in your return.

Ownership details of the property – The tax benefits of interest are only available to owner of a house property. You may be repaying the interest, but if you are not an owner you will not be able to claim interest deduction in your return. In case you are a co-owner in the property find out your share in the property. The amount of deduction you can claim is based on your share in the property. Both the joint owners can claim a maximum deduction of Rs. 2, 00,000 each for a self-occupied property.

Completion of construction or date of purchase of the property – The deduction for interest can be claimed starting the year in which the construction of the loan against property is completed. You can also claim pre-construction interest as mentioned above.

Borrower Details – For claiming interest deduction the owner must also be a borrower in the home loan documents.

A certificate from the bank which has your interest and principal details. This you can use to find out your outgo towards interest and principal. Municipal taxes paid during the year.

Municipal taxes are allowed to be deducted when these have been actually paid during the year.

Other Tax Benefits Besides interest, the portion of your EMI which goes towards principal repayment is allowed to be claimed under section 80C. This amount can be claimed within the overall limit of Rs 1, 50,000 under section 80C. If you have paid stamp duty and registration charges, those are also allowed to be claimed under section 80C

Source: http://decodingtaxbenefitsoninterestonloanagainstproperty.pen.io/

Loan against Property

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs. Loan against Property 

Property Loan

Let your property be a shelter to your dreams. IDBI Bank Loan against Property is a multi-purpose loan that can be used for your business or personal needs. Property Loan

Benefits of Loan against Property to Fulfil Your Needs

Getting the benefits of loan against property is one of the best decisions to overcome any sort of financial crisis. The process of loan against property is quite simple. All that you need to do is just mortgage your commercial property with bank or any financial institution. They lend you with the amount of what your property is valued. With the availability of loan against property you can easily fulfil your dreams and pay EMI at rate with which you are comfortable with.

There are number of reasons for opting for loan against property. You can get benefit of these services irrespective of the reasons. So now there is no need to compromise on your dreams anymore. But the main question one has is 

How to get loan against property?

Process of procuring loan against property

The process of getting loan against property is quite simple and hassle free as well. In the era of progressive technology, there is no need to spend huge amount of money for filling the forms and finding for the all the documents that are quite necessary for getting loan. The application procedure is now very much simple as it is done completely through online. You can do this task at the comfort of your home.

There are number of websites that are available in this regard. These websites put certain criteria in order to become eligible for loan against property. So you need to check your eligibility and how much amount you can get as loan against property. You can make use of the eligibility calculator and know about the details this will help you to take better decision. The interest rate of these loans varies from one lender to another. So it’s better advised to make proper decision before you proceed. Loan against property provides you with finance at the time of financial crisis and help you to fulfill your dreams.

Source: http://loanagainstpropertyindiablog.tumblr.com/post/139777672651/benefits-of-loan-against-property-to-fulfil-your

All you should Know about Loan against Property

Loan against Property Loan against property can be availed against a self-occupied residence or a commercial house. The foremost prerequisite on the bank's part is that there should not be any other encumbrance. Loan against Property is the most secure of loans therefore the lending rate is normally low compared to other unsecured loans. However, because of the configuration of lending by banks, they have a propensity to be somewhat higher than housing loans. The eligibility criteria for getting Loan against Property is also laissez-faire, as the property is available as collateral. The repayment term can also be long from 5 to 15 years.

When to look at Loan against Property? 

For anyone who has a house or commercial property and is looking for a loan, Loan against Property should be the first option. The only loan with better features could be the gold loan. But there could be a lot of sentiments attached to pledging gold, so it generally gets done as the last alternative. That leaves the Loan against Property as the better choice. Though a housing loan and the Loan against Property are secured against the property, Loan against Property is on the existing assets and the assessment of the property is released for productive activity. For a businessman looking to inflate business, Loan against Property comes in versatile as they do not have to gaze for expensive sources and the processing is also much quicker. A few banks also give overdraft facility against the property; this will help the business as interest will need to be paid only for the amount used. Funding children's education can also be done using Loan against Property; also their marriages. But as a general rule, one has to be a cautious when taking loans for expenses.

Advantages of Loan against Property

Value of the asset owned is free for productive use.

The interest rate is lower than other options like a personal loan or a credit card borrowing where the funds can be used for a wide variety of purpose without informing the lender.

Processing is quicker than a housing loan as the assets is already in our ownership.

Partial pre-closure is authorized without any penalties. This is an advantage as the overall interest burden or the tenure of the loan can be abridged by paying small additional amount.

If the assessment of the property has risen over a period of time, a re-financing option can be used to augment the loan amount. This aspect again is very constructive for businessmen, who are on an expansion spree. They can use the same property to constantly build the business.

The property continues to be in the possession of the borrower.

Some disadvantages of Loan against Property

Banks usually do not give loans beyond 60 per cent of the assessment of a house property and 50 percent of a commercial property.

New businesses generally cannot have access to Loan against Property. They should have been in continuation for at least 3 years. Salaried persons can get it if they are in employment for over 1 year itself.

There will be some processing charges usually in the range of 0.5 percent to 1 percent.

Source: http://loanagainstpropertyindiablog.tumblr.com/post/139646706451/all-you-should-know-about-loan-against-property

Loan against property scores over personal loans

A loan against property (LAP) is exactly what the name implies — a loan given or disbursed by mortgaging property. The loan is given as a certain percentage of the property's market value, usually around 40-60 per cent. It belongs to the secured loan category where the borrower provides a guarantee by using his property as security.

The borrower can either opt for an overdraft option where he is required to pay interest only on the amount withdrawn or a lump sum loan amount. The disadvantage of an overdraft facility is that the interest rate charged may be higher, in some cases up to 0.5 per cent and also annual processing fees will be charged. Additionally, only banks can offer the overdraft facility as other financial institutions do not offer savings/current accounts.

In case of a lump sum loan, processing fees are charged only once when the loan is taken and also the individual can approach either a bank or financial institution for the loan.

WHY LAP?

Long tenure loans: For individuals requiring funding for a long period of time, LAP can come very handy because the tenure of these loans can be a maximum period of 15 years.

Large Loan amount: Individuals requiring substantial funds also should consider this option as a large loan is possible. Of course it depends on the property value. There is no restriction as in case of personal loans where the maximum loan permissible is Rs 10 lakh.

Lower rate of interest: On account of the house being the collateral, the rate of interest charged by loan against property banks tends to be much lower than personal loans.

You can normally take a loan against your self-occupied or rented residential property. This could be a house or even a piece of land.

Source: https://loanagainstproperty.quora.com/Loan-against-property-scores-over-personal-loans