Introduction
Government offers tax benefits on home loans to encourage home ownership and tax relief to taxpayers.
In India, there are various tax benefits on Home Loan under various Sections.
Let’s understand Tax benefits and tax Sections so that you can be well guided in future.
1.Section 24. Deduction of Interest on Home Loan:
Under Section 24 of the Income-tax Act, one can claim a deduction on interest paid on Home Loan.
The maximum amount for deduction: 2,00,000/-per financial year
Eligibility: Self-occupied property.
Condition:
Under this section the loan should be taken for purchase or construction of house.
If the loan is taken for construction of a house, then the construction of the house must be completed within 5 years from the end of the financial year in which the loan is taken.
If the property is not self-occupied i.e let out or deemed let out, then there is no upper limit on the interest that can be claimed for deduction. One can claim the whole interest paid in a financial year as a deduction from taxable income.
2.Deduction on Principal Amount of Home Loan -Section 80C:
Under section 80c one can claim a deduction on Principle amount paid against home Loan EMI.
Maximum Amount for deduction: 1,50,000/- per financial year.
Condition:
One should not sell the property within five years of possession. If done so, the amount claimed as a deduction will be added to the income in the year of sale.
3.Deduction of Stamp Duty and registration charges under section 80C:
Besides claiming the deduction for Principal amt, One can also claim for stamp duty and Registration charges under sec 80 C within the overall limit of 1.5 lakhs.
The only condition is to claim for deduction in the same financial year the expenses have been incurred.
4.Deduction on Home Loan under section 80 EE
To claim deduction under this section the amount of loan taken should be Rs 35 lakh or less, and the property’s value does not exceed Rs 50 lakh. The home loan should be taken between 1st April 2016 to 31st March 2017.
5.Deduction on Home Loan under section 80 EEA
Section 80 EEA is the deduction for interest paid under the home loan.
Under this section, one can claim an additional deduction of Rs.1.5 lakhs per financial year by fulfilling few conditions.
Condition:
Only first-time home buyers can claim this.
The taxpayer should not be eligible to claim deduction under Section 80EE.
Home loans taken should be sanctioned in the financial year 1 April 2019 and 31 March 2022.
The Stamp Duty of the house/ property should be up-to the value of Rs.45 lakhs or Less.
The maximum amount for deduction: 1.5 lakhs
6.Deduction on Joint Home Loan:
This deduction can be claimed by the joint Loan holders. They can claim a Deduction on interest paid against the home loan of maximum Rs.2 lakhs each and a deduction on principal repayment of Rs.1.5 lakhs each, per financial year.
Co-borrower Should also be the joint owner of the house property.
Considering the above-mentioned Tax benefits on home loans, one can invest in real estate with ease.
