Avail tax incentivesDid you know that tax laws assure incentives to encourage people to buy homes? Go on. Check out these incentives and make the most of them.

Incentive 1 : Interest on housing loans are exempted upto a ceiling of Rs. 1,50,000 (sec 24)
Incentive 2 : A Deduction of Rs. 1 Lakh from taxable income is available for home loan principle re-payment.
Incentive 3 : Exemption from Capital Gains (sec 54f) : Capital gains resulting from the transfer of any capital assest not being a residential house, will be exempt of the net consideration is used to purchase a residential house within a period of 1 year before or 2 years after the date of transfer or construct a residential house within 3 years after the date of transfer.

Some guidelines for working professionals to plan their loans.The ideal loan an investor should avail of is Rs.20 lakh. Here's how…

Let's presume that a senior executive receiving a salary of Rs.5 lakh per annum takes a loan of Rs.20 lakh. The rate of interest charged on this loan is 7.5% per annum. Thus the total interest payable for one year on Rs.20 lakh comes to only Rs.1,50,000.

The maximum amount of interest that will be allowed as a deduction while computing the income of the individual from all sources taken together is restricted to a maximum sum of Rs.1,50,000/- per annum. So, the entire interest payment of say Rs.1,50,000/- would be allowed as a deduction to this executive from his salary income of Rs.5 lakh!

This implies that the executive would be saving income tax on Rs.1,50,000/- which is the payable interest. The tax saving would be at the rate of 33% being the maximum marginal rate of income tax applicable to him. Thus, the saving on account of deduction of interest from the total income for salaried executive comes to Rs. 49,500.

Hence, we find that from the total interest payment of Rs.1,50,000/- payable by the executive on loan of Rs. 20 lakh @ 7.5 % interest has actually been paid by the income tax department by granting him full deduction in respect of such interest payment on loan.

There by the net outgo of interest on the loan comes to Rs.1,00,500/- (Rs.1,50,000 – Rs.49,500). Thus the net impact of interest on the executive's loan of Rs.20 lakh comes to Rs.1,00,500/-. This in fact, is just 5.02% rate of interest per annum.

If we go a step further and take into consideration the impact of tax saving as a result of the deduction from taxable income on account of home loan principal repayment. We find that the said executive is able to save income tax to the tune of Rs. 30,000/-.

Hence from the above amount of Rs 1,00,500/- if we deduct Rs.30,000/- the net impact comes to a mere Rs 70,500 - Rs.1,50,000 interest Rs.49,500/- tax saving on interest payment Rs.30,000/- cash flow saving as a result of principal repayment.

Thus, on a total loan of Rs.20 lakh, the net impact of out flow after tax comes to Rs.70,500/- which means effective interest rate of merely 3.525% in respect of a Rs. 20 lakh loan.

So keep in mind the golden Rs.20 lakh mark and you will reap rich benefits.