Housebuyers will
be able to avail an additional Rs. 1.5 lakh deduction on home loan interest for
properties worth up to Rs. 45 lakh.
This is over
and above the existing deduction of up to Rs. 2 lakh.
Effectively, home
buyers of affordable housing can claim deduction of up to Rs. 3.5 lakh.
This Rs. 1.5 lakh extra deduction can only be claimed on loans sanctioned during the current
financial year 2019-20.
Also, the individual must not own any
residential property on the date of sanction of the loan.
According to the Finance Minister Ms. Nirmala Sitaraman, this deduction will
translate into a benefit of about Rs. 7
lakh for homebuyers over a loan tenure of 15 years.
A 15 year home
loan of up to Rs. 35 lakh at an interest of 8.7% translates into an interest
outgo of Rs. 2.99 lakh in the first year.
At 9% interest on a 15 year home
loan, the interest payment in the first year works out to Rs. 3.12 lakh.
Effectively,
most new homebuyers who have taken a loan this year will not be able to claim
the entire deduction of Rs. 3.5 lakh.
Further, this
interest outgo will progressively reduce over the years. By the ninth year, the
interest component would drop below Rs. 2 lakh.
Borrowers will
not materially benefit from the additional deduction in later years.
Even then, the
total deduction of up to Rs. 3.5 lakh will translate into tax savings of about
Rs. 70,000 in the first year for someone in the 20% tax bracket.
The total
savings over a 15-year tenure would add up to more than Rs. 5.5 lakh.—Team ET
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