1. Will I get tax benefits on loans?
Yes, under various sections of Income Tax department, you are eligible for tax benefits
2. Do I get deduction on Interest payment?
The repayment of the interest portion of the EMI is allowed as a deduction under section 24 under the head "income from house property" up to Rs. 1,50,000/- for self-occupied property. It may also be the full amount in case of let-out property if the purchase or construction is completed within a period of three years from the end of the year in which the loan is taken.
3. Do I get deduction on principal?
Under section 80C up to a maximum amount of Rs. 1 lakh, the repayment of principal amount of the loan can be claimed as a deduction. Under Section 80C towards payment made for stamp duty, registration fee and other expenses for the purpose of transferring the property in the name of the assessed also, one can claim deduction. All these deductions however should not exceed the overall limit of Rs. 1 lakh. However, deduction under Section 80C is not available in respect of payment made towards the cost of any addition, alteration, renovation or repair carried out after the issue of the completion certificate.
Income from House Property:
According to the Indian Income Tax Act, if a person (resident or NRI) owns more than one house property in India, only one of them will be deemed as self-occupied. There will be no income tax on a self-occupied property. The other one, whether rented or not, will be deemed to be given on rent and deemed rental income (based on certain valuations prescribed by the income tax rules) will be added to income. Further, TDS will be deducted on actual rental incomes earned by NRI.
Wealth tax is levied on the value of specified assets in excess of the Rs. 30,00,000. Specified assets include house property. However, the Wealth Tax Act provides an exemption in respect of one house property in India. There is a specific exemption available for returning Indians in respect of investment made in house property out of money brought from outside India or from balances held in NRE accounts as on date of return to India.
If a residential property in India is held by the seller for more than 36 months, it is considered a long-term investment or else short-term. Long Term Capital Gain shall be computed by considering indexed cost of acquisition. NRI's are entitled to claim exemption from capital gains tax if they re-invest in specified assets as per Income Tax Act.