I am a defaulter of two credit cards? How long will my name be in the defaulters list? Can I get a home loan?
—yyy If you have defaulted on credit card payments, banks are unlikely to grant you a home loan unless the same is fully backed by tangible movable i.e. easily encashable security like loan against gold or shares or bank FD. Your default will continue to show in the credit information records for at least seven years. You can try and build your credit history by taking a loan or a credit card against fixed deposits or other tangible security such as jewellery, shares etc where the lender can give you a loan despite your adverse credit report. By regularly paying your dues you will be able to rebuild your credit history. Mind it that rebuilding the credit history is a very long and painful process and will take at least 2-3 years before any lender will consider giving you a home loan. I plan to foreclose the 10-year home loan of R15 lakh that I took two years ago. What is the tax implication? Is there an ideal period of maintaining a home loan to reduce tax outgo?
—yyy A foreclosure of home loan account per se does not have any tax implication. However, if you sell the house property within five years from the end of the financial year in which the property was purchased, the deduction allowed under Section 80 C in respect of that property in earlier years will be deemed to be the income of the year in which the property is transferred. If you do not sell the property, the amount of principal paid as part of foreclosure will be eligible for deduction under Section 80 C within the overall limit of one lakh rupees. There is also a case that foreclosure charges payable, if any, is also deductible as interest under Section 24. Can I take the home loan from a relative? What documents will be needed for the purpose?
—yyy Yes. You can take a home loan from your relative and claim tax deduction benefits for interest payable on the loan. The deduction will be restricted to to R1.5 lakh if the house is used for self residence and full interest will be allowed if the house property is let out. Please note that no deduction is available for principal payment under Section 80 C in respect of loans taken from friends and relatives. If required during the assessment proceedings, you will need to provide proof that the loan given by the relative was used for the purpose of acquiring the house property. You will also need a certificate from your relative. I am planning to buy a residential plot, and the construction may take another 2/3 years. Can I avail of a house loan, and get IT benefit on it?
—yyy Yes, you can get a loan from a lender to self-construct a house provided you begin construction within a reasonable time frame (say six months) of taking the first disbursement on the loan. You will be able to claim income tax benefits under section 80C for the principal repayment and section 24 for the interest paid on the housing loan. However, you will get tax benefit only from the financial year in which the construction is completed. If the house is used for self use, the construction will have to be completed within three years from the end of the financial year in which the first disbursement of loan was taken. Otherwise the maximum limit for such deduction will be R30,000 only.