July 2020 - Realtech Nirman

Moratorium and its Effect on Home Buyers

On account of the global pandemic and the economic blow that has been caused due to it, the Reserve Bank of India (RBI) has permitted moratorium period on term loans initially for 3 months till 31st May 2020 which has been extended to August 2020.

RBI Governor Shaktikanta Das announced this in aid of those facing major difficulties in loan repayments and are financially compromised in these crisis period due to the worldwide and nationwide lockdown. But what does this mean to you if you are paying EMIs and how does this affect you? We are here to answer some of the questions you have been seeking answers for.

What is moratorium period and how does it affect a borrower?

A moratorium period means a time-off from loan repayments for a borrower. It should not be confused as a waiver at all. Moratorium only means a borrower does not need to start loan repayments, instalments or interest dues for a certain period of time including personal and credit card dues.

A fixed period of time announced as moratorium period hence means that one can defer EMI payments for that period. Although not all lending institutions are obligated to allow this and can independently set the criteria for permitting a repayment holiday. Similarly, one can choose to avail the moratorium or not.

Whether one avails the moratorium or not, has nothing to do with the CIBIL score and he or she will not be considered as a defaulter for that period.

If a borrower avails it, he or she ends up paying more interest that gets added to the overall liability. This means, whereas the borrower gets some time to re-organise funds in short-term, at the end he or she ends up paying more than the actual liability that is far less when moratorium is not opted for. On account of longer tenure due to moratorium period, the interest accumulated on the outstanding sum ends up in higher repayments.

Most home buyers requesting for moratorium period while purchasing an under-construction property are offered up to 3 years of moratorium and up to 6 months in case of ready-to-move properties by the banks who agree upon it.

With most businesses suffering losses due to the pandemic and lockdown, the extra interest accumulated shall be a reason for concern for the self-employed citizens. For those whose funds suffice and are not facing a cash crunch, it is advisable to pay the EMIs instead of availing the moratorium. This is applicable on credit cards as well and a deferment in payment can result in an increased interest of 4-8% instead of the usual 2-4% charged on roll over balance.

If you have booked a property in Kolkata and have started paying EMIs already, ask you bank about moratorium and the difference in the final loan repayment amount before you decide to avail it.

Tax Benefit on Home Loan

Although the year 2020 has given us a tough time, it may be the best time to invest on the property you wished for since long. Easy home loan facilities gets a cherry on the top of the cake with the tax benefit increased up to Rs 3.5 Lakhs in July 2019 budget. Additional benefit for first time home buyers have also been given as per the policy. This scheme, the deadline to avail which was March 31, 2020, has now been extended to March 31, 2021, by Finance Minister, Nirmala Sitharaman in her Budget 2020 speech.

The total interest amount payable on a housing loan, can be claimed as a deduction from one?s total Gross Income as per the income tax laws. One can claim a maximum of Rs 3.5 Lakhs as deduction amount allowed FY 2019-20 onward for those purchasing residential property under the affordable housing scheme. As a part of the ?Housing for All by 2022? policy of the Government, this deduction under Section 80EEA has been extended to the next financial year.

Features of Section 80EEA

Who can avail this deduction?

Only individuals and not any other taxpayer can avail this deduction. For example, Partnership firm, a HUF, AOP, a company, or any other kind of taxpayer, are not entitled to any benefits under section 80EEA.

How much deduction can I avail through home loan?

A deduction up to Rs 1,50,000 is available under Section 80EEA for interest payments which is over and above the deduction of Rs 2 Lakhs for interest payments available under Section 24 of the Income Tax Act. Hence, an individual taxpayer is privileged to a total deduction of Rs 3.5 Lakhs for interest on home loan. However, these are further subject to conditions applicable under this section.

Is this similar to section 80EE?

First time home buyers are meant to be highly benefited from this policy if one avails a home loan valued up to Rs 45 Lakhs and is sanctioned before March 31, 2021. The middle-class strata of the society will mainly profit from this and affordable housing shall be an integral part of the Government?s Housing for All by 2022 policy.

Conditions Applied on Tax Benefits on Home Loan under Section 80EEA?

A financial institution or housing finance company must be lending the loan to the individual to buy property for residential purpose only.

The stamp duty value of the house property should not exceed Rs 45 lakhs.

The individual availing the scheme shall not be qualified to claim deduction under the existing Section 80EE.

The taxpayer must be purchasing a residential property for the first-time and cannot own any residential house property as on the date of sanction of the loan.

The carpet area of the property shall be not more than 645 sq ft in metropolitan cities and 968 sq ft in any other cities or towns.*

The property for which the individual wants to avail this scheme must be approved on or after September 1, 2019.*

Inorder to avail tax deduction, one first needs to ensure that the property is individually or jointly owned by the taxpayer and the loan is sanctioned against the individual or jointly with another co-borrower. The home loan certificate must be submitted to the employer for adjustment of TDS whereas, in case of self employed individuals, one must use it while filing tax deduction for self.

*These conditions have been specified in the memorandum to the finance bill, but not mentioned in section 80EEA.

5 Easy Kids’ Room Decor Ideas

The growing years of a child are the most challenging ones. To give them their own space during their learning phase gives the little adventurous minds more room to spread it’s wings. Parents planning their kid’s room decor should make it an enjoyable place for their creative years. Designing a gorgeous and useful room for them is a challenge worth taking as they will cherish it later. Although giving a separate room to a child at an early age is not customary in India, but new age parents understand the need for it. A separate room for kids helps them build a sense of ownership and care for larger and more important things they achieve later in life.

If you are a new home buyer and are planning a separate room for your child, your choices should reflect practicality and must be affordable too as a child’s need changes very quickly with time until they reach a certain age. You will want to keep making small changes to the d?cor as they grow up to fit their needs. Here we have 5 kids’ room decor Ideas that will help you decorate or redecorate it.

Simplicity is the key

Always remember, less is more. More open space, less cluttered rooms creates more play area for your child. Use of simple and basic furnishings to provide a neutral canvas which can be restructured with no trouble is recommended. This is practical as in future as your kid grows up, the decor can be easily updated. A low and neatly tucked bed, proper storage for play items, a small but shelved cupboard and a cosy corner is all you need to make your kid’s room well organised but beautiful at the same time.

Double your storage space

As soon as your kid starts schooling, their need for space increases. Search options for furniture with built-in storage like, beds with storage crates under them, cupboards with adjustable shelves, extra hooks behind the door for hanging daily uniforms and similar needs that can be catered easily from a single furniture in an organized manner.

Brighten up the walls

Use bright colours for the walls of your kid’s room. This can be very tricky as you want to keep it bright but classy at the same time. If you have bright coloured furniture, it is advisable to paint the walls white or any other light hue. This also makes the room look larger and makes it well lit. Another way to create a playful room is to use a fun wallpaper which can be easily changed to their choice when they wish to. You can also use rainbow colours that goes with them for quite a long period.

Create a go-to place for little tired minds

When planning your kid’s room decor, try to keep in mind their leisure time too. A comfortable corner with a canopy is a great option that works best for not only kids but for teenagers as well. Tuck in some cushions and soft toys to make a cozy reading space for them. However, not all apartments are spacious enough for it. The most trending ideas for small apartments are to make a chalkboard wall. This where they can be creative and pour their heart out to be themselves again. This is affordable and here to stay.

Frame the growing years

A separate blank wall to display memorable growing years of your kid is a good way to cherish past years’ memories. You can also use them to display your kid’s masterpieces and use customized frames for it. The wall can be conveniently updated according to your child’s changing taste.

Recent home buyers are looking for 2.5 and 3.5 BHK apartments in Kolkata. The 0.5 can be utilised as play room or study for your kid. This will allow the kid’s room to be solely for play and sleep while the separate study also serves purpose of work station when you are working from home.

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