High Income & Low Tax By Buying A House.

High Income & Low Tax By Buying A House.

The executive director of PricewaterhouseCoopers Mr.Kuldeep Kumar says that, according to the individuals are allowed deduction of the entire interest payment on their home loan from their taxable income-provided you club the rental income from the house with it.

Home buyers are allowed a deduction of Rs2,00,000 on interest payment of their home loan under new Budget. If individual show your purchase as an investment and not for personal use then there is no such limit exists. A senior chartered accountant Mr.Vivek Jain said that the benefit of tax is huge because with the interest rates at around 10% per annul and rentals from a residential property, residential property hovering around 3% of capital value even the metros, your actual outgo amounts to about 7% every year. This net loss is rightfully claim as deduction from your taxable income.

Rent’s return

The interest burden will decline with each year with the part of EMI being used to pay the principal, it will be reduced to Rs 29,25,675 in the next year.Interest amount will fall fur but a single calculation shows that even if rental keep increasing at 5% CAGR, your income from rent will exceed your interest outgo, only in the 15th year.

Mr.Kumar says buyers who are yet to get possession of their flat stand to gain as well. After 15 years you can reinvest the money in a new one by selling the house and you can always invest in more than one property and save even more tax.

Enter your email address: