A Modern Life Style

Key Tax Benefits You Can Avail

Key Points

1. Deduction on Interest Payment (Section 24)

Under Section 24 of the Income Tax Act, homeowners can claim a deduction of up to Rs.2 lakh on the interest paid for home or apartment loans — provided the property is self-occupied. Once the apartment’s construction is complete, you can also claim pre-construction interest in five equal annual installments, beginning from the year of possession.

2. Deduction on Principal Repayment (Section 80C)

The portion of your EMI that goes toward principal repayment is eligible for deduction under Section 80C, up to Rs.1.5 lakh per financial year. This section also covers stamp duty and registration charges, which can be claimed in the year they are paid.

3. Eligibility and Conversion

To claim these benefits, ensure that your apartment loan is converted into a regular home loan after construction completion. The process is straightforward and essential for unlocking your eligible deductions

Important Considerations for Apartment Loans

Q4. Loan-to-Value (LTV) Ratio:

Apartment loans generally cover 60–70% of the property’s value (compared to up to 90% for home loans). The balance must be paid by the buyer, ensuring a higher personal contribution but lower lending risk.

Q5. Type & Location of Property:

Lenders typically offer apartment loans only for residential apartments located within municipal or corporation limits. Agricultural or rural properties may not qualify.

Q6. Loan Tenure:

Apartment loans generally come with a maximum tenure of 15–20 years, whereas home loans can extend up to 30 years, allowing for more manageable EMIs.

Q7. For Non-Resident Indians (NRIs):

NRIs can apply for apartment loans, but interest rates are generally higher and conditions stricter. It’s advisable for NRIs to compare loan options carefully before proceeding.