Many first-time homebuyers are sometimes perplexed about the income tax benefits they might obtain on a house loan after acquiring their first residential property. If you are purchasing a property for the first time, you are eligible for income tax incentives under three parts of the Income Tax Act: Section 80C, Section 24, and Section 80EEA.

These parts of the Income Tax Act allow you to claim a home loan benefit of Rs 5 lakh each year. Let's look at a thorough chart of Income Tax parts to see what we're talking about:

Consider the following scenario: you have acquired a home in April 2021, the property value is Rs 50 lakh, and you have borrowed 80% of the property value, i.e. Rs 40 lakh, from a financial institution (bank or NBFC) at a 7% interest rate for 20 years.

Your monthly EMI would be roughly Rs 31,000, and you would have to pay a total of Rs 3,72,000 in the first year, of which Rs 2.77 lakh would be the interest component payment and Rs 95,000 would be the principal component payment. If your yearly income is Rs15 lakh, you can deduct Rs 95,000 (principal payment) under Section 80C (remaining Rs 55,000 of 80C be deducted from stamp duty payment, effective only for the first year), Rs 2,00,000 under Section 24, and the remaining Rs 77,000 interest payments by Section 80EEA.

As a result, you may claim a tax deduction of Rs 4.27 lakh in the first year. Furthermore, the principle and interest paid components of house loan EMIs to alter each year, therefore it is recommended that you examine it ahead of time before doing your tax preparation.

The government's increased subsidy to larger homes under government initiatives has made owning your dream home even more appealing. But it isn't all. In fact, the government's push to boost the Indian housing and real estate sectors has seen a sea change in the last two years, with the implementation of the Real Estate Regulation and Development Act (RERA) and the Goods and Services Tax (GST), all of which are expected to improve transparency and build confidence among homebuyers.

In the previous 3 to 5 years, the residential market has had a time correction, and recently, the market has also witnessed a price correction of up to 20%, bode well for house purchasers, particularly first-time buyers.

RERA's benefits will be seen by consumers.

In order to accomplish its aim of 'Housing for All' by 2022, the government has implemented a number of substantial policy changes in the housing industry. One of the most significant was RERA, which is projected to cause price adjustments in locations with a substantial stock of finished projects, particularly in the premium and luxury segments. RERA is also anticipated to demand a time adjustment and guarantee that customers received what they want within the time frame specified by the builders.

Following RERA, builders and real estate corporations are taking consumer protection efforts more seriously than ever before. As a result, we are seeing an increase in RERA projects this year.

Many state governments are also making measures that are beneficial to consumers in both text and spirit. Some states, including Delhi, Jharkhand, Rajasthan, and Haryana, have begun to provide women partial stamp duty exemptions.

Similarly, state governments are enacting policy frameworks to promote cheap housing; Rajasthan, Gujarat, and Uttar Pradesh were among the first to develop a model framework for affordable housing. Meanwhile, the Maharashtra government's decision to bring Maharashtra Housing Area Development Authority (MHADA) redevelopment projects and Slum Rehabilitation Authority (SRA) schemes under RERA is expected to benefit the city's slum population and residents whose properties have been demolished or are scheduled for redevelopment. According to estimates, 41 percent of Mumbai residents live in slums, while 85 percent of all building in the city involves rehabilitation.

Tax advantages for a second-time homebuyer

When a husband and wife buy a house together, the income tax advantage regulations stay the same. However, both the husband and wife can claim tax benefits on their own tax returns. Maximum deductions advantages cannot exceed the actual amount paid, i.e. neither husband nor wife can profit from the same payment.

For example, if the interest component is Rs 2.77 lakh and the husband has claimed a tax deduction advantage of Rs 2 lakh under Section 24, the wife can claim just Rs 77,000. The benefit received against the interest component can never exceed Rs 2.77 lakh, which is the amount actually paid in this case.

Similarly, if Rs 95,000 is paid towards principle, either husband or wife can claim the whole Rs 95,000 benefit under Section 80C. They can split the cash according to their tax planning if they desire, but the whole amount of the benefit cannot be collected in both accounts.