I have been waiting to buy a flat in Navi Mumbai but have delayed my decision to to ahead because the home loan interest rates are currently so steep. Is it true that interest rates are likely to come down by the middle of the year? By how much do you think they will reduce? Sheela Phadnis, Mumbai Most loans provided by banks are at the floating rate of interest. In other words, it does not really matter at what rate you start. If the interest rates go down in the future, you will also benefit. Make sure you take your home loan from a good bank or housing finance company. Also ensure that you get answers to these two questions from your provider - what is the floating rate linked to, and how often will it be re- set? It looks like the Government has been doing everything in its power to make real estate unattractive to buyers and investors. Do you think that the upcoming Union Budget will offer any relief to home buyers? Hrishikesh Sapre, Navi Mumbai Real estate prices in India are really high, so it is hard to qualify your statement, which seems to imply that the Government may be to blame for the unfriendly nature of the market. That said, I do not expect the upcoming Union Budget to give any major breaks to anyone.

The Finance Minister will be challenged enough just to pass a plain, simple budget, and it is unlikely that any new ground will be broken this year.

How much can I save on income tax when I buy a residential property through a home loan? I intend to take a home loan for Rs.

25 lakh.

S. K. Basically, there are two deductions in the Income Tax Act which will help you.

The first is Section 24, wherein interest upto Rs.

1.5 lakh is allowed as a deduction, and the second is Section 80 C, under which the principal that you pay in your home loan EMIs is allowed as a deduction. This section also includes your childrens fees, contribution to a pension fund, PPF, life insurance payments, etc. I am assuming that this is your first house and it is going to be self- occupied.

P V Subramanyam P V Subramanyam is a Chartered Accountant by qualification and a financial trainer by profession. He has over 20 year of experience in the financial services industry and is an authority on equity, mutual funds, corporate finance and personal financial planning. Visit his blog at http:// www. subramoney. com