Housing Finance and Tax Planning | Module D: Wealth Management
Home Loans, Housing Finance & Tax Planning - Bank Theory Additional Reading Material on Home Loans, Housing Finance and Tax Planning 1. Home Loans Overview Home loans are secured advances provided by financial institutions to individuals for the purchase, construction, renovation, or extension of residential properties. These loans are generally long-term, repayable over 10 to 30 years with fixed or floating interest rates. Example: Mr. Sharma takes a home loan of ₹50 lakhs at an interest rate of 8.5% p.a. for 20 years. The EMI will consist of both interest and principal components, and over time, the principal component increases while the interest component reduces. 2. Housing Finance and Tax Planning Housing finance plays a dual role in meeting shelter needs and enabling tax planning. A borrower can optimize tax liability using tax deductions available under the Income Tax Act for both the interest and principal portions of the EMI...