Extra Advantages Available for First Time Home Buyers

Buying a home for the first time has a mix of feelings. There is excitement, anxiety, and happiness. However, there is one more factor only first-time homebuyers can look for. First time home buyers can enjoy some special privileges that are created to encourage new entrants into the real estate ownership market. Let’s have a look at the benefits for first time home buyers.

To understand this easily, we have listed down the advantages of buyers taking the first home loan.

Extra deduction eligible on home loan

One of the main benefits as a first time home buyer, is that you are allowed to take tax benefits under certain sections of the Income Tax act of the country. The sections are - Section 80C, Section 24 and Section 80EEA. These sections let you avail of home loan tax benefits of up to INR 5 lakh on an annual basis. We have explained the benefits of each section for your perusal.

Section 80C

You can claim up to INR 1.5 lakh on the repayment of the principal amount of a home loan. This deduction is applicable for properties that are complete and are kept for at least 5 years since the date of purchase. This means that if you decide to sell the property within 5 years of purchasing it, then the rebate that was claimed will be added to your income and will be taxed.

Section 80EE & 80EEA

As a first time home buyer, you can avail tax benefit of INR 50,000 on interest repayment under section 80EE. In 2019, section 80EEA was introduced. This section extends tax benefits on interest repayment to INR 1.5 lakh for a home loan under ‘affordable housing’. However, this is not over and above section 80EE. Also, you need to note that your loan should have been sanctioned between 1 April 2019 and 31 March 2022. And the stamp duty on the property should not exceed INR 45 lakh. This benefit will not be available from April 01, 2022 onwards.

Must Read : Stamp Duty and Franking Charges in India

Section 24

This section allows you to claim deductions on interest paid up to a maximum of INR 2 lakhs per annum, only for self-occupied property and not rented.

Lower Stamp Duty for Women Buyers

Many state governments offer a lower stamp duty if a woman is the main owner of the house. Stamp duty is the fee a home buyer has to pay, for getting the property registered in government’s records. In Delhi, women home buyers only pay 4% of the property value as stamp duty, as compared to 6% by men. In Jammu, stamp duty is waived on property purchases by women. In Maharashtra, women get a 1% as home buyers. Women have to pay 2% of the property value as the stamp duty on property registration, whereas men have to pay 3%. In Uttar Pradesh, women are offered a 1% concession subject to INR 10 lakh, out of the total value of the transaction. In Himachal Pradesh, women have to pay 4% stamp duty and men have to pay 6%. In cases of joint property, the stamp duty will be 5%. Thus, it is advisable to look into these benefits if the primary borrower is a woman.

Pradhan Mantri Awas Yojana (PMAY)

PMAY gives a substantial subsidy to first time home buyers from EWS and LIG. This is subject to a maximum family income to be INR 6 lakh. The subsidy rates on the principal amount vary, depending upon the income. There are few beneficiaries under the Pradhan Mantri Awas Yojana . They are

a) Economically weaker section (EWS).
b) Lower income group (LIG).

Families that earn an annual income up to INR 3 lakh will fall under EWS category, between INR 3 lakh to INR 6 lakh belong to the LIG category.

EWS and LIG scheme holders would be eligible for a subsidy of up to INR 2,67,000 on their home loan amount.

Let’s take an example - If your home loan amount is INR 1,000,000 and your home loan subsidy amount adds up to be INR 267,000, then the amount of INR 267,000 will get reduced from the total repayable amount and your repayable home loan would be INR. 10 lakhs + interest charges - interest subsidy of INR 2,67,000. You just have to prove that you are a first time buyer, by submitting a declaration of not being an owner of a pucca house. It should be your first time home buyer loan.

You can avail PMAY interest subsidy through SMFG Grihashakti with flexible repayment and minimal documents. You can connect with SMFG Grihashakti for the best home loans for first time buyers.

Must Read : Step by Step Guide For First Time Home Buyers