Union Budget Home Loan 2022 Incentives

Finance minister Nirmala Sitaraman presented the Union Budget 2022-23 on 1st February 2022. While presenting the budget in Lok Sabha, she said that this year's budget will be the foundation for India's economic growth and expansion for the upcoming 25 years. The Government is making all-out efforts to provide 'Housing for All' by 2022.

Along with several other sectors, various incentives are announced for the housing sector too. Among them, one of the biggest highlights is the allocation of Rs. 48,000 crore to the Pradhan Mantri Awas Yojana (PMAY). Other important announcements related to the housing sector include enabling faster approvals for affordable housing in urban areas, setting up a panel of experts and veterans for the housing sector who will put forward suggestions on policy matters, capacity building and implementation, etc.

If you are a prospective homebuyer, then here are 5 important things you should know about housing loan incentives as per the Union Budget 2022-23.

1. From Any Lender - A housing loan taken from a financial institution or an employer, relative, friend, or private lender is eligible for tax deductions. This is applicable only in the case of interest and not for the principal amount. To avail this incentive, you have to present a certificate from the lender.

2. Claim Total Interest Paid - You can book an apartment under construction for a cheaper rate than a completely furnished one. The Income Tax law permits you to claim the total interest paid towards the home loan during the pre-delivery period of the apartment. This can be done as a tax deduction under 5 equal installments. The period of installments starts from the financial year in which the construction was completed, or you acquired this new apartment. Generally, this denotes the date of possession. In case of a self-occupied property, the maximum deduction you can claim in one year continues to be Rs. 2 lakh. If it is your first house, then you are eligible for the additional interest deduction of Rs. 1.5 lakh.

3. Joint Purchase - If you are buying a new apartment using a home loan, it will be more profitable to purchase it jointly with your spouse. Before availing a loan, you must have carefully considered the principal loan amount and the home loan interest rate. Similarly, you can consider availing this joint tax deduction. Each of you is entitled to a deduction of Rs. 2 lakh for interest paid by each of you. In case your child is employed, earning income and if the bank approves, you can split the loan three ways. All three of you can avail up to Rs. 2 lakh as tax deduction individually. This is applicable only if it is a self-occupied property.

4. No Tax For Second House - In case you are buying a second self-occupied property, no additional liability will be added to your taxable income. So, no additional tax will be levied if you can't find a suitable tenant or wish to keep it for yourself. You can keep it self-occupied. This is available only for up to two houses. If you have a third self-occupied house, it will attract tax on its 'deemed value'. This means, the tax will be calculated for this house as per expected market rent.

5. Rent or Loss - Rs. 2 lakh is the maximum limit for the total loss from housing property which can be adjusted under any other income like salary or other sources. If you can't keep the Rs. 2 lakh interest under any of the heads of income, this surplus interest can be carried forward for only 8 assessment years. This set-off is only possible under the income head - Income from house property. If you haven't let out your house on rent, it becomes a sunk cost.

Other than the home loan interest rate and EMI to be paid, keep all these home loan incentives in mind before buying a new home using a housing loan. Think twice, Be wise!

Author Bio:

Vinod Gill is a writer who specializes in writing content on Insurance and Finance subjects. He is a Digital Marketing Consultant, Blogger, and Co-Founder of Abestfashion.