FAQ

Yes, depending upon the eligibility criteria and policy of the bank.

Loans are generally disbursed between 70%-80% of the cost of the flat. The balance money is to be funded by the flat purchaser from his own contribution. The percentage of loan would vary from bank to bank.

Any Indian citizen, including Non Resident Indians, with a steady source of income can borrow funds for financing the cost of a flat from housing finance companies and banks.

Various varieties of housing loans are offered by different financial institutions. Prominent among these are:

• Home LoansThis is the basic housing loan for the purchase of a new home, which covers the cost of the flat, deposits and charges, stamp duty and registration charges.
• Home Improvement / Extension LoansThese are for the purpose of undertaking repair works and renovations in a home that is already owned by you.
• Bridge LoansBridge loans are for people who wish to sell their existing house and purchase another one and need finance for the new house until a buyer is found for the old one.
• Balance TransferA balance transfer indicates the paying off of an existing housing loan and availing of a loan with a lower rate of interest.
• Refinance LoansRefinance loans are taken to pay off the debt incurred from private sources such as relatives and friends, for the purchase of your present house.
• Loans To NRIsThese loans are designed as per the requirements of NRIs who want to buy a house in India.

Deduction of interest on housing loan:

In the case of self-occupied property acquired or constructed out of borrowed funds, the deduction available for interest on capital borrowed is Rs. 2,00,000/-. In case of a rented property, the whole of the interest amount is allowed as deduction. The interest on borrowed funds in pre-construction period is allowed over a 5-year period commencing from the previous year in which the house is acquired or constructed.

Limit of repayment of housing loan (principal):

The limit of repayment of housing loan qualifying for deduction u/s 80C is Rs. 1,50,000/- (including Stamp Duty, Registration Fee incurred for the purpose of transfer of such residential house property).

Long term capital gains on sale of property used for residence:

Section 54 of the Income Tax Act provides relief to an individual or Hindu Undivided Family from capital gains arising from transfer of a residential house held by the assessee at least for a period of 36 months. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a residential house is exempt u/s 54. If the amount of capital gains is proposed to be utilised, but is not so utilised up to the due date for filing of return then, the amount of unutilised capital gain is required to be deposited in the “Capital Gains Account Scheme, 1988”.

Capital gains on transfer of capital assets other than a residential house:

Section 54F of the Income Tax Act exempts long term capital gains arising from transfer of any long term capital asset other than a residential house. Such capital gains to the extent utilised for purchase (within 1 year before or 2 years after the date of sale) or construction (within 3 years of date of sale) of a residential house is exempt u/s 54F. To be entitled to this exemption the assessee should not own more than one residential house other than the house sold as on the date of transfer. The provisions of depositing the unutilised capital gain in the “Capital Gains Account Scheme, 1988” as explained above is also applicable.

Capital gains not to be charged on investment in specified assets:

Section 54EC of the Income Tax Act provides relief from capital gains arising from transfer of any capital asset on or after 1st April 2000 shall be exempt to the extent such capital gain is invested within a period of 6 months after the date of such transfer in the long term specified asset provided such specified asset is not transferred or converted into money within a period of 3 years from the date of its acquisition. However, the investment made on or after 1st April 2007 in the long term specified asset by assessee during any financial year cannot exceed Rs. 50 lakh. For claiming this exemption, the capital gains have to be invested (investment not to exceed Rs. 50 lakh) within 6 months of the date of transfer in notified bonds issued by:

• a) National Highways Authority of India (NHAI)
• b) Rural Electrification Corporation Ltd. (REC)

Deduction of interest on housing loan:

In the case of self-occupied property acquired or constructed out of borrowed funds, the deduction available for interest on capital borrowed is Rs. 1,50,000/-. In case of a rented property, the whole of the interest amount is allowed as deduction. The interest on borrowed funds in pre-construction period is allowed over a 5-year period commencing from the previous year in which the house is acquired or constructed.

Limit of repayment of housing loan (principal):

The limit of repayment of housing loan qualifying for deduction u/s 80C is Rs. 1,00,000/- (including Stamp Duty, Registration Fee incurred for the purpose of transfer of such residential house property).