Buying a home is a big deal in India and thus every person, especially the salaried ones, save the provident fund amount to realize their dream of being a landlord. A homebuyer can use the PF amount either to buy a plot or a ready-to-move-in apartment. Hence, this blog post offers tips to use to provident fund for property purchase.
1. PF for Buying a Plot
An employee is eligible to withdraw provident funds for buying a plot only if he/she had made a contribution to the PF account for a minimum of five years. A person can withdraw this amount individually or jointly in the name of his/her spouse.
The withdrawal amount limit depends upon the specific reason. For example, the withdrawal amount for purchasing a plot is restricted to 24 months’ basic salary and dearness allowance (DA). This amount cannot value more than the actual value of the plot.
2. PF for Buying a Home/Construct a Home
In this case, an employee can withdraw provident fund amount only if he/she contributes to the PF account for a period of five years. However, here a person is eligible to withdraw 36 months’ basic salary and dearness allowance (DA) either individually or jointly with his/her spouse.
The withdrawal amount should not exceed the actual value of a home/residential structure.
The construction of a property should commence with six months and must be completed within 12 months of the last installment of withdrawal. Remember that the PF withdrawal can be availed in installments as per the requirements and circumstances.
3. PF Withdrawal facility Housing Society Member
Apart from withdrawing the PF amount individually, you can also derive money from the EPF account if you are an existing member of a registered housing society. This withdrawal can be made by a person to buy a plot or a residential unit approved by the Government or any of its agency(s).
A person can utilize this option only if the housing society has a minimum of ten members. The maximum withdrawal amount is limited to 90% of the calculated balance with subject to the unit value of the acquired property.
Firstly you have to make a continuous contribution to the EPF account for three years and a person is eligible to withdraw this amount only once in a lifetime.
Under the EPF account, you are eligible to pay in installments for any loan that has been incurred by paying via your EPF account. However, this is a subject matter of sufficient/insufficient balance in your account.
4. PF Withdrawal for Renovation/Improvement of Self or Spouse-owned Property
A person is eligible to withdraw PF either for his/her self-owned residential property or for the property owned by his/her spouse or for the jointly-owned immovable asset. As per the rule, you can claim for this withdrawal amount only after five years of building construction.
This PF withdrawal can be attained for a house/property irrespective of the fact that whether you have withdrawn the PF amount earlier for the construction of the same property or not.
The withdrawal amount is restricted to 12 months’ basic salary and DA and the cost of the improvement will also be considered.