Synopsis
Exemption on plot loans generally falls into one of the following two groups:
1. You are not eligible for any tax benefits if you purchase a plot with no plans to build anything on it and wish to keep it as is to sell in the future as a long-term investment.
2. You are qualified to receive tax benefits if you plan to buy a site to build a villa, bungalow, home, or any other type of building. Both the plot loan taken to buy the plot and the home loan taken to build a house on the plot qualify for the tax benefit.
When requesting a loan for a plot purchase, most of us always look for tax advantages. People frequently enquire whether tax advantages are also available for plot loans. Nowadays, a large segment of people choose to buy vacant lots and have their ideal homes constructed there rather than choosing an identically designed apartment or villa.
The idea that loans for plot purchases don't offer as many tax benefits as dwelling loans is untrue. Now it's that time of year when people get concerned and scramble to collect receipts, deductions, income papers, bank statements, and more. In fact, tax season is quickly approaching. However, if you don't own a piece of land or other property, you could lose out on a significant tax advantage.
How to avail the tax advantages of a plot loan?
Remember that tax benefits on plot loans can only be claimed once a building has been completed on the subject plot.
Benefit from taxes under section 80C:
You may be allowed for a deduction under this section for the portion of your home and plot loans that relates to the principal payments and ignores the plot loan interest rate. This permits a maximum exemption from your taxable income of INR 1,50,000 each year. If they are paid for in the same year the home's construction was finished, the title transfer fees for the plot and the enrollment fees are also included in the exempted amount.
Tax benefit under Section 24 for the plot loan:
After the house is built and occupied, you can receive an additional tax reduction on the interest portion of the loan. To take advantage of this benefit, you have to convert your plot loan into a regular home loan. Under this clause, you may deduct up to INR 2,00,000 from your total taxable income and INR 1,50,000 if you fail to file your returns for the year. However, if the built home is given as a rental, the entire interest is forfeited.
Takeaway
While you might be persuaded about buying a property, one of the first stages is how to register a loan for plot purchase. Applying for an HDFC plot loan is simple & quick. You can apply for an HDFC land loan in a few easy steps. As soon as HDFC receives your loan application, it immediately begins the steps to process the same. Now is a good time to decide to buy a home; start the process immediately.
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