Homeownership offers not only the pride of owning an abode you can call your own but brings with it many tax benefits. From deductions on home loan interest and principal repayment to exemptions on capital gains, there are multiple tax advantages. Whether you are a first-time home owner or adding to your already existing real estate investment portfolio, the tax benefits you reap are aplenty. Let us explore more about these here – 

Home loan interest deduction

Under Section 24(b) of the Income Tax Act homebuyers can avail income tax benefits on their payment against the home loan interest. They can claim a deduction of up to Rs. 2 lakh per annum in case of a self-occupied property, and if the property is let out, there is no cap on the interest deduction,  the entire interest amount paid can be claimed as tax deduction. 

There are certain documents required for the process – The home loan agreement, loan repayment schedule, annual interest certificate from the lender specifying the total interest paid on the home loan during the financial year, property ownership documents, documents that indicate the occupancy status, and Form 16 (for salaried individuals)/ Form 16A (for non-salaried individuals), showing the TDS. In the case of a joint home loan, both applicants can claim tax benefits on the interest paid, however the sum of the deductions claimed by both cannot exceed the total interest paid on the loan during the financial year

Home loan principal repayment deduction 

Tax benefits on the principal repayment of a home loan can be availed under Section 80C of the Income Tax Act.  Home buyers can claim deductions up to ₹1.5 lahks annually on their payment against the principal amount of the home loan. When co-owners of the property avail joint home loan, each co-borrower can claim deductions of up to ₹1.5 lakh annually on the principal amount repaid towards the home loan. However, the total deduction claimed cannot exceed the actual principal amount repaid during the financial year. This provision encourages joint ownership of properties and allows all co-borrowers to enjoy tax benefits.

Capital gains exemption 

To incentivize investment in real estate, the government offers tax benefits when one sells a residential property and reinvests the proceeds in another one. This called the Capital gains Tax exemption can be availed under section 54 of IT if the new property is purchased within a specified time frame after the sale of the old property and meets certain conditions. To claim full exemption the entire amount received from the sale of the old property has to be reinvested in the new one. 

As the apartments in Chennai reap excellent ROI both in terms of rental income and also asset appreciation over time, one can always reshuffle their real estate investment portfolio by selling under-performing assets and opting for flats in upcoming locations like the emerging hotspots in OMR, the Padur and Siruseri neighborhoods, and the serene locality of Thirumazhisai near the ORR. These emerging markets offer huge properties for reasonable prices and also guarantee good rental income and property appreciation in a short period. The growth of industrial establishments, IT development, and infrastructure growth fueled by the metro expansion, all of which guarantee exponential growth of these residential markets in the city.

Real estate investments have proven to be resilient to market fluctuations and offer excellent returns over time. They are safe and rewarding and stand as a solid financial support for the future. Apart from the plenty of tax benefits they bring in, they ensure both emotional satisfaction and a sense of personal achievement. The beautiful city of Chennai offers futuristic flats in emerging markets in tune with the desires of the next-gen home buyers. Schedule a project site visit to these futuristic ventures and make the smart investment that brings with it  many tax benefits and the surety of good returns.