Revising the basics of Property Buying

Property buying in realty market of a city like Pune is a challenging task. Understanding the insecurities that a new home buyer would have, today, we go back to the basics of the property buying process and the commonly used terminologies of the industry that the potential home buyers will come across.

Imagine you go to the shopping complex to buy clothes. You find a variety of clothes with many designs in different colors at the store. You like a particular dress design and you purchase it and return to home. And later, after a few weeks, you realize that the quality of the dress you purchased was not good and that disappoints you. This is due to lack of awareness and knowledge about the types of fabrics which led you to buying a dress of poor quality. Similarly, in the real estate industry, you must know the commonly used terms and their meanings so as to not get bluffed by the advertisers and agents and make an informed choice. 

The following are the commonly used terms in the real estate industry:

Carpet Area: This is the area that you actual usable space that you get inside the house. Carpet Area, literally, is the area that you would be paying for  while buying that property. The builder needs to quote rates for this carpet area and you must find out how much carpet area is available out of the built up area.

Built-up Area: The built-up area takes into account the thickness of the internal and outer walls and also the area of the balcony. This excludes the carpet area of the house.

Super built-up Area: Commonly known as the sale-able area, super built-up area is relevant to the multi-dwelling units and hence is one common term that you would get to hear too often. This includes the area that is available for common  use such as lobby, lifts, staircase, etc. At present, it would also include the swimming pools, gardens, clubhouse, and other similar amenities. This area is proportionally divided amongst the flats. The loading factor is derived here, which is applied to the carpet area in order to get the super built-up area or the sale-able area.

Hence, if you are planning to buy a home in near future, this is the homework that you need do before stepping out in search of properties that fulfill your requirements. 

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How to claim tax exemption on Loan Principal and Interest?

We all plan to purchase properties when we are financially sound to pay the home loan EMI. However, not many of us are aware of the tax benefits that we can claim out of the home loan that we apply for while we buy a property. In our previous posts we have discussed about how you can claim HRA and tax benefits if you have a home loan for the property you have just purchased.

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Today we are going to understand how you can claim tax exemption on loan principal and interest.

When it comes to tax breaks on the applied home loan, you are eligible to claim tax benefits only for the principal of the loan amount before the completion of your house. On the completion of your house, you are then eligible to claim tax benefits on the total interest paid till the date of completion of the house. In case where the house is let out, the entire interest paid on home loan can be deducted.

Tax Exemption on Loan Principal and Interest

The interest that is paid on a home loan is not deducted directly from the salary income for home loan. The calculation of income from house property is done for each house that the individual owns. A self employed person is eligible to avail tax benefit for the rent that he pays for his residence and can claim the deduction under section 80GG of Income Tax Act. Here, no HRA exemption is available in case of a self employed individual.

A tax payer can avail the following tax benefits on home loans:

1. If you have applied for a home loan and you want to repay the principal amount on home loan, then the principal amount will be deducted from gross total income. In case the house is let out, the deduction for the entire interest paid on home loan is available.
2. Tax benefit on interest payment. 
3. Additionally, interest paid on home loan during the pre-construction period, i.e., period prior to the financial year in which house is purchased or constructed can also be claimed as deduction. 

We shall discuss about how you can claim both, the HRA and the home loan tax benefits together in our upcoming post. Till then stay tuned!

Read More:

1. HRA and Tax Benefits from Home Loans?
2. Confused how home loans can get you Tax benefits?
3. Homes that are well connected!

HRA and Tax Benefits from Home Loans?

In our previous post, we had discussed about how you can avail HRA and tax can be exempted in your property. We shall now understand this with the help of the following example:

Consider an employee who resides in Mumbai. He pays rent of Rs. 20,000 per month and his salary is divided into the following components:

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• Basic pay: Rs. 50,000 per month
• Dearness Allowance or DA is Nil.
• HRA is Rs. 20,000 per month which is 40% of the Basic Pay

The exempted amount of HRA from the above mentioned details will be the least from these figures where HRA is Rs. 20,000, Rent above 10% of Basic= Rs. 15,000 (20000-5000) and 50% of the Basic Pay= Rs. 25, 000.

Out of these the least is that of the Rent above 10% of Basic i.e. Rs. 15,000. And hence, in this example, the person can avail HRA tax exemption of Rs. 15,000 per month out of the total HRA that is Rs. 20,000 per month.

Therefore, the net taxable portion of the HRA would only be Rs. 60,000 per year.

Net taxable portion of the HRA = Total HRA received per year – HRA tax exempted per year

It is important to note that the house rent allowance can be claimed if the following conditions are fulfilled:

• The person is an employee and is salaried
• He/she receives HRA as a part of his salary
• He/she is not a resident of the same city where he/she has his property
• He/she pays the rent of the house that he is staying in as a tenant and has a valid agreement of the same

The HRA tax exemption is done based on monthly or yearly basis depending upon whether the above mentioned clauses remain same throughout the year or vary during the year.

Read More:
1) Confused how home loans can get you Tax benefits?
2) Understanding EMI calculations
3) EMI: Evaluate, Manage and Impliment?

Confused how home loans can get you Tax benefits?

Naiknavare Developers - Pune

In a country like India, where the growing population is a major concern today, buying homes comes out to be an equally critical issue. Everybody desires to have a home of their own. In such a scenario, most of the people who are salaried employees depend upon the home loans for buying themselves their first house. However, not everyone knows how tax benefits can be claimed when they buy a property.

Quite often, questions like whether an income tax benefit can be obtained when you already possess multiple properties, out of which some are rented out, come up while a person is about to purchase a property and is thinking of applying for a home loan.

With a home loan you are entitled to pay a generous amount as an interest over a period of time which has dual benefits. We shall discuss a few points that would be helpful for you in availing the income tax benefits with more efficiency.

• House Rent Allowance (HRA) Exemption

If you have applied for a home loan for a property that you want to buy and you are staying in the property, then you are eligible to claim tax benefits on both, the principal and the interest of the home loan that you have applied for.

Regarding the actual HRA from the employer/ the company, according to section 10(13A) of Income Tax Act, 1961 read with rule 2A of Income Tax rules, you are exempted from tax with one of the following three conditions where the value considered for the actual HRA exemption will be the minimum value among the below mentioned figures:

• Actual HRA received
• Rent Paid in excess of 10% of salary (Basic + DA)
• 40% of salary (50% in case of metro city) where salary includes Basic + DA

Hence, it is important to have clear information about each of these so as to claim your HRA.  We shall understand this with the help of an example in our next post as the benefits do not end here. Stay tuned!

Homes that are well connected!

Dwarka Township, Chakan - Naiknavare Developers

Are you dreaming of a home that is well connected to other parts of city?

Would you say No to a living space that has an absolute look and feel of a home that is well structured and finely designed?

Not an easy thing to do!

Bringing to you the professionally structured, the finely crafted and the aesthetically built upcoming residential project by the prominent players in the real estate market of Pune, the Dwarka Project by Naiknavare Developers.

A well planned and framed project that gives you an experience that you have always longed for!

The project that is a true manifestation of your dream home!

Dwarka is a precisely designed residential space that is been carved with minute details in order to give it an extraordinary appeal.

A project that is located in the serene and picturesque locations of Chakan, Pune. The project has been designed with an exclusive development approach. Dwarka is structured and constructed with a sector wise development for easy management and good urban development.

Had it been that such homes were available at all places, the life as today would have been so much different! A life away from the hustle and bustle of the city! A life close to the nature yet well connected to Pune & Mumbai with all the peace you would want!

Row House - Dwarka Chakan

A Dwarka home is not merely a living space but a home you would crave to live in forever! A truly customer’s delight, Dwarka offers you a life that would compliment your lifestyle and give you access to all the basic amenities that you would require. The sports complex, wide internal roads with plantation, 

play area for children, jogging track, stage for performing art, large water body are mesmerizing enough to woo your minds each day you step in to the lawns of your Dwarka Home.

It is surrounded by school, shopping malls, highway, railway station, commutation facilities that add to your convenience of staying at Dwarka! Along with these, the Dwarka School is an added advantage for the people who have school going children.

Read More : -

• The Unique project in Pune to woo your minds!

The Unique project in Pune to woo your minds!

Ever imagined your home at a place which is perfectly planned to give you an ultimate experience of Dwarka?

Dwarka - Naiknavare Developers, Chakan

Unlike others, the Dwarka Township in Pune is undoubtedly one of the amazingly crafted and conceptualized projects that is inspired by the ancient city of Dwarka and has been based on the principles of the same to compliment each of the resident’s grandeur and stature in the Chakan location of Pune.

A project designed with such perfection, the township reaches out to as big as 130 acres at Chakan. The pattern that speaks of the sector wise township for people from various strata of society. If you feel this is it to this marvellous project, then wait! There is a lot more to it than what you just read!

In today’s world where a home is associated with multilevel emotions and feelings, a home, that gives you the greatest satisfaction each day when you return after a hectic day at work and spend time with family and friends at peace. You, like everybody else, would surely want such a place to stay where your mind is at peace and your body is relaxed.

Apartments in Chakan, Pune - Naiknavare

At Dwarka, the architecture of the project is designed in such a way that the measures like rain water harvesting and rain water treatment to water the green plants and forest gardens make a perfect combination of technology with nature’s beauty right at your doorstep! The elegantly designed project will give you an extraordinary living experience like never before. The sectors constructed share common amenities like shopping complexes, entertainment and sports complexes, educational and medical facilities.

A one of its kind project that has a beautiful blend of nature and contemporary architecture, Dwarka is the place for you for the ideal living experience! The state of art amenities and exceptional ambience of your home at Dwarka will keep you attached to the home at all times.

If you feel you desire to have a home where your feel the ambience so calm and a place where your mind is at peace, body is relaxed and soul is rejuvenated even after spending tiresome day outside home at work, Dwarka homes are meant for you! the ideal match for all your desires for a home!

Read More : -

Naiknavare, Creating Better Society with Better Homes

Dwarka Based Inspired Residential Unit in Pune, Naiknavare Project of Exclusivity

Understanding EMI calculations

Have a property in mind and have planned to opt for a home loan for the same?

As spoken in our previous blog, Equated Monthly Installment is more about Evaluation, Management and Implementation of the research you carry out before opting for a home loan. Post the research having a complete understanding about the calculation of EMI is important.  To begin with, let us understand what EMI stands for.

EMI or Equated Monthly Installment is described by the Investopedia as “ a fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly installments are used to pay off both the interest and the principal each month, so that over a specified number of years, the loan is paid off in full.”

Surely, this definition is self explanatory, however, we shall have an in depth understanding about EMI with the help of an example in the latter part of the blog.

From the definition we can arrive at an understanding that when a borrower borrows money, he is entitled to make a certain fixed amount of payment to the lender periodically for several years so as to complete he loan repayment. This loan repayment can differ from one payment scheme to another, depending on the comfort of the borrower to repay the loan over a certain period of time which may be short or long term. 

One of the main benefits of paying EMI for the borrower is that he is well informed about the amount he needs to pay to the lender every month, making his budgeting process easier.

The formula for EMI (in arrears) is:

or, equivalently,

Where: 

• P is the principal amount borrowed, 

• A is the periodic amortization payment, 

• r is the periodic interest rate divided by 100 (annual interest rate also divided by 12 in case of monthly installments), and

• n is the total number of payments (for a 30-year loan with monthly payments n = 30 × 12 = 360).

Consider an example, a person takes a loan of 20,00,000 units of currency from the bank at 10.5% annual interest of 10 years (120 months), then the EMI can be calculated equating the mentioned details in the equation stated above in the following way:

EMI = 

Units of currency 20,00,000 * 0.00875 * (1 + 0.00875)^120 / ((1 + 0.00875)^120 – 1)= Units of currency 26,987.00

Hence, the person will be paying 26,987.00 units of currency for 120 months to completely repay the loan taken from the bank. The total amount that he would be paying will sum up to 26,987*120= 32,38,440.00 units of currency. This includes 12,38,440 units of currency as the interest paid towards the loan.