Know how a plot loan tax works

Owning a piece of land gives you a sense of accomplishment but it tags along consecutive tedious events. The process of buying a plot is a roller coaster event filled with dopamine. If you know your process right and have gathered enough information about your investment, the location of the property, and loan taxes you are ready to set in your foot into the real estate market. If you are not into real estate then it could become a little tricky to understand it but it is not rocket science.

Let us understand what is plot loan. When an applicant is looking to invest in a plot and planning to build his/her dream home, the loan is disbursed by the bank to the applicant. Everyone tends to look for tax benefits when applying for a loan. If you are wondering if tax exemption would be applied for plot loans then there is no direct answer to this. Tax benefits could be availed with what you intend to do with the owned piece of land. 

Here are two categories to help you understand the plot loan:

  1. When you buy a plot from an investment point of view with no intentions to build anything on it and wait for a higher return on investments in the future, then you will not be eligible for any tax exemption. 
  2. The second scenario is when you buy a plot with an intention of building a bungalow, villa, or house to avail tax benefits. The benefit also extends to both the home loan to construct the home and the plot loan to buy the plot. 

So here is how everything you need to know about tax benefits on a plot:

Tax Benefits under section 80C:

Section 80C – a clause under the Income Tax Act of India considers various investments and expenditure exemptions from the department of Income tax. With the help of this section, you can have a deduction on the home loan and plot component – which directly makes a pact with principal repayment and not the interesting part of the loan. With the help of section 80C, you can get a maximum exemption of Rs.1,50,000/- per year from the yearly taxable income.

Tax benefit under Section 24:

Under section 24 of the Income Tax Act, once you have completed constructing your home, you can convert the plot loan to a home loan to help you benefit from the interest component. The process of converting your plot loan into a home loan is easy and can be easily availed, but only if you have completely constructed your house. You can avail of a maximum deduction of Rs. 2,00,000/- and 1,50,000/- if you are filing the returns now. But the whole of interest would be abandonment if the constructed home is given on rent.

Now you understand the process of a plot loan and what you are looking for. If you are looking for investing in plots in Bangalore, then you are at the right place. Bluejay is one of the leading real estate developers in Bangalore with over 11 years of experience and has many new projects in Bangalore. They have the best villa plots in South Bangalore and they have plots for sale in Bangalore North too. Pick the plot that suits your need the best. Book now!



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