Acquiring a new home is a big financial decision and a long-term commitment. Need help with some answers?
We’re here to clear your doubts.

Taxation

Q : Is income from house property taxable?

A : Like incomes from salary, business profits, and profession, income from house property is taxable and added to the total income.

Q : How is computing of house property done?

A : Income from house property is computed on the basis of annual value of the property. Annual value as distinguished from rental value is calculated based on inherent capacity of the house property to earn income. Inherent capacity denotes the amount for which the property might be reasonably let out. This will be higher of rent paid by the tenant or annual rate value fixed by municipality, or the rent of similar property in the locality etc.

Q:Is the annual value of the house subject to income tax if it is self occupied?

A:No, when a house property is self occupied the annual value of such property is taken as nil and as such no income tax is payable. In fact you shall be eligible for deductions such as interest on loan taken for purcahse of property etc. from your total income.

However, if you happen to be owner of more than one house property for own residential purposes, then only one house can be treated as self occupied and the annual value of such property be taken as nil, all other houses shall be deemed to be let out and annual value shall be computed accordingly.

Q:What are the deductions available in case of self occupied property?

A:Interest payable (whether paid or not) on loan for purchase, construction or reconstruction of house property is allowed as a deduction ( from total income) up to Rs.200000/- PA.

Finance

A. For the employed
  • Verification of Employment Form.
  • Latest Salary Slip/ Certificate showing all deductions.
  • For transferable jobs, permanent address whose correspondence relating to the application can be mailed.
  • A letter from employer agreeing to deduct the monthly installment towards repayment of loans from your salary.
B. For the self-employed
  • Balance Sheets and Profit & Loss Accounts of the business or profession along with copies of Individual Income
  • Tax Returns for the last three years certified by a Chartered Accountant
  • A note with information on the nature of business or profession, form of organization, clients supplier etc.
C. Documents required for home loans for NRI’s
  • Copy of visa stamped on passport
  • Work permit
  • Overseas bank account statement for last 4 months
  • Photograph
  • Processing fee
  • Continuous discharge certificates for mariners
  • Local POA for outsiders
  • Post-dated cheques during disbursement
  • ID card issued by employer

Home Loans

Eligibility criteria for a loan

Most financial institutions would take into account the following criteria:

Salaried / self employed personnel Indian citizen / NRIs

What are the type of home loans available?

Home loans can broadly be classified in to the following:

  • Home purchase loan

This is the basic loan required at the time of purchase of a home.

  • Home improvement loan

This is given in the context of renovation or repair works of the existing home.

  • Home construction loan

This loan is given for the construction of the house.

  • Home extension loan

This is given for further extension of expansion of a already existing home.

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