Owning a house provides a certain level of mental and psychological satisfaction and it creates a sense of social security among the homeowners. However, according to tax and investment experts, buying a home to avoid Income tax Not a good idea. He added that if one is not sure about how much money he will have to spend out of his own pocket, buying a house can become a nightmare. He also said that if one is not sure about his duration in the city, it is better to live in a rented house than to buy a house.
Speaking on why and when you should buy a home; Balwant Jain, a Mumbai-based tax and investment expert, said, “Banks do not accept more than 80 per cent of the cost of a home property as home loans. Hence, a home loan applicant has to pay more than 20 per cent of the additional cost of the property. Savings. Also, there are some other miscellaneous charges like stamp duty and brokerage charges etc. which are not funded in bank loan also. Hence, home loan applicant should check his savings before applying for home loan Will happen.”
Highlighting the other factors a home loan applicant should consider while buying a house, Balwant Jain said, “If the person intending to buy the house is posted in a city for a short period or it is located in such city Post where he does not intend to settle down, then living in a rented accommodation is a better option. Real estate transactions have some hidden costs like stamp duty, registration charges, brokerage for sale and purchase of the house, etc. cannot be recovered.”
Whether it is wise to buy a home to avoid income tax; Sebi registered tax and investment expert Jitendra Solanki said, “Buying a home to avoid income tax may or may not be advisable as it depends on the investments and other liabilities of an earning person. Taxpayer is allowed to claim income tax exemption up to 1.50 lakh home loan principal repayment in a financial year under section 80C of the Income Tax Act while the taxpayer can claim income tax benefit under section 24(b) 2 lakh home loan interest repayment in a financial year. Since, Section 80C exemption covers other investments like ELSS Mutual Fund, Provident Fund, LIC, child’s school fee etc., most of the times it is found that a home loan applicant is not able to claim exemption. 1.5 lakh on the repayment of the principal of the home loan. So, its home loan interest 2 lakh which is mainly considered as income tax benefit for the home loan applicant.”
SEBI registered expert further said that in case of claiming income tax benefit under section 24(b), one has to see how much income tax he is saving by buying a house. He said that if a person falls in the income tax slab of 30 percent, then it is advisable to buy a house to avoid income tax. However, in case the income tax slab falls somewhere around 10 per cent to 20 per cent, one should consider buying an individual mediclaim for your family including your senior citizen parents. This will enable him to claim income tax exemption on the annual mediclaim premium up to 75,000 ( 25,000 for himself and 50,000 for senior citizen parents). Also, one can go for NPS investment as well as it allows additional income tax exemption on maximum investment under section 80CCD. 50,000 in a financial year.
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