Income Tax Planning Can Save Your High Payable Tax on Home Loan
Having an own home is a dream come true for so many people. The Central Government of India always encourages people to invest in a home.
When you buy your home using the housing loan in India facility, you are also bound to get some tax benefits.
As per your home loan eligibility, you can avail of a large amount to either buy or construct an abode you can call your own.
You can also pay the home loan EMIs over a longer duration and don’t strain your wallets making bigger EMI payments.
Home loan tax benefits are applicable on various aspects of the loan, such as interest paid, principal repayment and much more.
It would be good to be aware of home loan tax benefits and avail of the perks in the same context. Read on!
- Deduction on interest paid portion on home loans
The interest charges you pay on your housing loan can be claimed as a deduction from your total income. The maximum limit is Rs.2 lakh as per section 24 of the IT Act. The maximum deduction on a self-occupied property is Rs.2 lakh. For rented properties, there is no limit for claiming deduction on the interest portion.
- Deduction on principal repayment
Your home loan EMI consists of two things, interest and the principal. For both these components, you can avail of the home loan tax benefits. You are already aware of the interest part. The payment of the principal amount is entitled to deduction as per Section 80C. The maximum amount that you can claim under this is up to Rs.1.5 lakh. To avail of this home loan tax benefit, the housing property should be sold within 5 years of possession. If not, the deduction claimed in advance gets added to your income in the year’s sale.
- Deduction for stamp duty and registration charges
It is also possible to enjoy tax advantages on stamp duty and registration charges. Besides interest and principal repayment, it is possible to pocket such deductions. You can avail of deductions under section 80C of the IT Act. The overall limit is Rs.1.5 lakh. But, there is one condition to do that. You can claim it only in the year such outlays incurred.
- Additional deduction under section 80EE
The extra deduction under section 80EE is also available for homeowners. The maximum amount that can be claimed is set at Rs.50,000. If you want to claim this deduction, the loan amount taken should not be lower than Rs.35 lakh. Also, the value of the property you wish to claim this deduction should not go beyond Rs.50 lakh. The loan must also be availed between 1st April 2016 and 31st March 2017. On the day the housing loan is sanctioned, the borrower must not own any other home.
- Deduction for a joint home loan
Many people avail of a housing loan in India with a co-applicant. If you avail of a home loan jointly, each loan holders are eligible to ask for a deduction on the home loan interest rates part. The amount is up to Rs. 2 lakh for each borrower. The principal repayment is allowed up to Rs.1.5 lakh as per section 80C. They can do that in their tax returns. But to claim this deduction, they ought to be the joint owner of the property taken on home loan in India. Hence, if you wish to buy a home using a home loan jointly with your family, it can help you enjoy significant home loan tax benefits.
You are now aware of the various ways you can enjoy home loan tax benefit. Based on your repayments, you can claim a deduction and enjoy big.
A home loan has emerged as one of the finest financial solutions these days.
If you have got the required home loan eligibility, you can enjoy a large amount. In turn, it can help you to buy a nest of your choice.
When it comes to availing of a home loan, you may come across many offers that may confuse you.
The best thing is to land on a third-party platform and compare all available loan offers. This way, you would be able to pick a deal matching your needs and budget the most.
