Buying a home is undoubtedly the biggest financial and lifestyle decision that you will make. A little homework will help turn your dream into reality. With the help of these FAQ’s, you can now make an informed decision. Happy Home Hunting!
How should I go about buying a home?
When buying a home, always do a background check on the builders and review their credentials.
Know the builder: An established company with a history of sound construction and above- board policies would be the right place to start.
Possession: Consider the time taken for completion of the company’s projects as that often helps in making an informed decision.
Legal Concerns: Find out if there are litigation’s in any court in India against the company and if there are any criminal cases against any of the directors of the company.
Where do I begin?
Once you’ve set your mind on buying a home, there is a lot more to consider thereafter. Prioritize your requirements, budget, locality and everything that affects your buying decision. Every detail needs your attention.
Are there additional costs for specific features?
Most quality projects come with a built-in set of amenities like- swimming pool, gym and common recreation areas. There may be other amenities that can be provided with additional costs. Look for features that are taken for granted, like pre-connected telephone, TV and Internet cables, security systems, interior design etc.
Should I be worried about any legal issues?
While purchasing a property, you have to look at the approved layout and building plan, ownership documents, and research on the same. It is advisable to contact an advocate before you purchase a property so that he can advise you. Certain areas have specific commercial or residential reservations and hence it’s advisable to have all the details before you commit to a purchase.
How do I finance my dream home and save on tax?
Finance plays a critical role in the purchase of your home. The important issues that are to be considered include modes of arranging finance and its implications on taxation.
- Use your own funds: If the house is being acquired out of the sales proceeds of an earlier house, the exemption from the long-term capital gain tax on the sale of the earlier house can be claimed under u/s. 54. To claim this benefit, the new property should be acquired one year prior to selling or two years after the date on which the transfer of the earlier house takes place. If not then the sales proceeds should be deposited in a bank or institution, which runs Capital Gain Accounts Scheme approved for this purpose. Further, in the case of individual or HUF (Hindu Undivided Family), exemption is provided from long term capital gain tax u/s. 54F on sale of any long term capital asset, if sale proceeds are invested in acquiring a house within prescribed period.
- Taking a bank loan: Interest paid on housing loan can be claimed as deduction under u/s. 24(b) to the maximum extent of Rs.1,50,000 per year. Such limit is per person and not for one property. Hence, a loan can be taken in two joint names for one house to claim deduction of Rs.1.5 lakhs each for both the persons repaying the loan. Repayment of the principal amount of housing loan is also eligible for the rebate u/s. 88 subject to a maximum sum of Rs.20,000 per year.