Is loan for farmhouse a home loan?

Rishi Mehra

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Q.Can loan to purchase a farm house or agricultural land be considered home loan making me eligible to avail of tax exemptions on repayment?

— Radhe Shyam

A.No, loan to purchase a farm house or agricultural land can’t be considered home loan. Land loans are not under any tax exemptions. Home Loan Income Tax benefits are divided into two parts. Principal repayment under Section 80C – Principal can be claimed up to the maximum of Rs1.5 lakh under Section 80C. Home Loan Interest repayment under Section 24 — Interest can be claimed as a deduction under Section 24. You can claim up to Rs2,00,000 or the actual interest repaid whichever is lower. As per the latest changed in the Income Tax norms – New loans up to Rs25 lakh for the first homes will be eligible for an additional tax deduction of Rs1 lakh of interest payments.

Q.I want to take a home loan for Rs6 lakh from SBI for a period of five years only in order to avoid paying a higher rate of interest. Is it possible or the bank will force me to take a loan for a longer duration?

— Sudesh Mittal

A.It’s possible to take home loan for five years from SBI. They can force you for a long term if your monthly income doesn’t meet the required criteria . For banks to give you loan for a short-term they need to see that your income is double of your monthly EMI. In your case if your monthly income is above Rs25000 per month you can get Rs6 lakh loan for five years.

— The expert is Co-Founder deal4loans.com.