The present market conditions are favourable for people who are contemplating investing in residential property. Various good deals are available in the market. Most builders are launching new housing projects with luring interest rates. Low interest rates combined with tax benefits under the Income Tax Act makes property, a good investment option. The various tax benefits that you can avail by investing in property are described below:

Tax rebate

As per the Income Tax Act, only those who have availed a home loan are eligible to claim Income Tax rebates

Tax deductions under section 24: Home loan borrowers are eligible for deductions to the extent of Rs. 1.5 lakh under section 24 from their taxable income against the interest paid on the loan. The interest on loans taken for repairs and reconstruction of an existing property also qualifies for the deduction.

Rebate under section 80C: By availing a home loan, one can also claim tax rebate under section 80C subject to a maximum of Rs 1 lakh.

Income tax and house rent allowance (HRA)

Many people have a common query, whether they can claim HRA benefits along with the income tax deductions. The answer to this query varies according to the situation. If you are living in the house you bought with the help of a home loan, you are only eligible for tax rebates under sections 24 and section 80C. You would not be eligible for any tax rebate under the HRA clause.

On the other hand if you have availed a loan to construct a house and are living in a rented place, you are not eligible for any tax rebates as per sections 24 and 80C till the time you acquire possession of your house but you are eligible for HRA benefits. When you start living in the house for which you availed the loan, you become eligible for the tax deductions, but the HRA benefits stop.