In recent years, housing finance has become a boon for potential homebuyers in India. Most homebuyers rely on home loans as it is one of the simple and convenient options to choose when buying their dream home with luxurious amenities and excellent connectivity.
However, before applying for a home loan, you must know about the home loan documents that need to be submitted and India’s tax benefits.
Let’s know more about them
First, let’s talk about home loans. If you want to secure a home loan, KYC documents, income proof, and other essential documents must be submitted and verified by the respective banks. Let’s dive deeper into these documents and learn more about them.
Documents Required For Home Loan are as follows:
KYC documents are the essential documents that need to be submitted to take almost any type of loan in India. KYC documents that are required to take a home loan are as follows:
- Passport size photograph
- Identity Proof (PAN Card/ Passport/ Aadhar Card/ Driving License/ Voter ID card)
- Residence Proof ( Electricity Bill/ Ration Card/Telephone Bill/ Passbook or Bank Statement with address/ Employment Letter)
- Age proof (Passport/ PAN Card/ Birth Certificate/ Bank Passbook/ Driving License)
An individual’s income and financial history are examined by banks and other financial institutions to check their loan eligibility and repayment capacity, and that’s why the bank demands authentic financial records from a home loan applicant. Documents that act as proof of a stable monthly income are as follows:
- Latest salary slips for the preceding three months
- Bank Statement for the last six months
- Form 16 (Part A & Part B) and filed Income Tax Returns (ITR) for the last 2 years
- Employee Identity Card
- Appointment Letter/ Employer Certificate/ Increment Letter (whichever is applicable)
Before approving home loans, banks and financial institutions verify and inspect property documents. These documents can further help banks recover bad debts in case of repayment default. Property documents that an applicant needs to submit are as follows:
- Registered agreement for sale
- Approved building plan copy
- Commencement certificate
- Payment receipts to the builder
- Registration Receipt
- Sanction letter
- Occupancy certificate
- Society maintenance, electricity bill copy
- Society Registration certificate
- Possession/Allotment letter
- NOC from the society
- Property insurance copy
Now, let’s look at a home loan’s tax benefits in India.
Interest Deduction on Housing Loan:
This deduction is applicable under section 80 EEA. It provides income tax benefits of up to 1.5 lakhs on the interest paid on home loans. These benefits are available over and above the existing Rs. 2 lakh exemption under section 24 (b).
Deduction For Joint Home Loan:
If two or more people avail a home loan, both of them can claim a deduction on the interest paid up to Rs. 2 lakh each. Apart from that, tax can also be deducted from the principal amount paid for up to Rs. 1.5 lakh each. However, these deductions are only applicable if both persons are the co-owners of the property. Hence, a joint home loan can help you get higher tax benefits.
Deduction For Stamp Duty & Registration Charges:
A deduction on stamp duty and registration charges can be claimed with a total limit of 1.5 lakhs under section 80C. It is important to note that this deduction is only applicable in the year these expenses are incurred.
Deduction On Principal Amount Repayment:
Under Section 80C, one can claim a deduction up to Rs.1.5 Lakhs on the principal amount of the EMI paid for the year only when the house property is not sold within five years of possession. If the deductions are claimed before that, they will be added back to the income in the year of sale.
So, if you are looking to buy a home and need assistance in securing a home loan, Stead Realty Advisory is one of Mumbai’s finest real estate advisories. We have a solution for all real estate problems ranging from home loans to interior designing of homes.