Home Loan Tax Benefits
Tax benefits on Home Loans can help reduce your tax obligation and make homeownership more feasible. Borrowers can claim tax exemptions on payments made towards both principal and interest components under various Sections of the Income Tax Act, 1961. Apart from this, borrowers can also claim income tax exemptions on stamp duty and registration charges.
Tax Benefits Available Under Section 8OC of the Income Tax Act
Under Section 80C of the Income Tax Act, 1961, one can claim tax exemption on repayments made towards principal amount up to a maximum of Rs.1.5 Lakh each year. In the case of a joint Home Loan, both co-owners can claim tax rebates under this Section separately.
Tax Benefits Available Under Section 24(b) of the Income Tax Act
Under Section 24(b) of the Income Tax Act, 1961, borrowers can claim tax exemptions on payments made towards the interest component of a housing loan up to a maximum of Rs.2 Lakh in each financial year. In the case of joint Home Loans, all co-borrowers can claim tax exemption separately under this Section.
Tax Benefits Available Under Section 80EE of the Income Tax Act
Under this section of the Income Tax Act, 1961, first-time homebuyers can claim an additional tax benefit up to a maximum of Rs.50,000 provided that the borrower does not have any other property in their name. The property value should not exceed Rs.50 Lakh and the Home Loan amount should not be more than Rs.35 Lakh.
Tax Benefits Available on Under-Construction Properties
Taxpayers can also claim tax benefits on under-construction properties. However, it should be noted that one can claim these Home Loan tax benefits only after the construction of the property is complete. Once the construction is complete, borrowers can claim tax deductions on interest paid during the pre-construction phase in five equal instalments.
Borrowers must also know that if they sell the property within five years of possession, all income tax benefits will be revoked.
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How to Calculate and Avail of Home Loan Tax Benefits
To calculate Home Loan tax benefits easily, you can use our Income Tax Calculator. By entering only a few details, such as your gender, annual income, the interest paid and the principal repaid on the Home Loan, you can calculate the amount of tax saved before and after availing of a Home Loan.
The process for claiming tax benefits on a Home Loan for salaried individuals is as follows:
- Calculate the applicable tax exemptions
- Ensure you have documents proving the ownership of the home and responsibility for repaying the housing loan
- Provide your Home Loan Interest Certificate to your employer for TDS adjustment
In the case of self-employed individuals, the taxpayer is not required to submit any document. However, it is advisable to keep the documents handy if required.
Disclaimer
The information remains subject to change depending on the laws and government guidelines, applicable at the time being. However, Bajaj Housing Finance Limited (‘BHFL’) is under no obligation to update or keep the information current. Users are advised to seek independent legal and professional advice before acting on the basis of the information contained in the Website. Placing reliance on the aforementioned information shall always be the sole responsibility and decision of the User and the User shall assume the entire risk of any use made of this information.
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