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 repayment 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, one can claim tax exemption on payments made towards principal repayment up to a maximum of Rs.1.5 Lakh each year. In the case of a joint Home Loan availed of by couples, both the husband and wife 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, borrowers can claim tax exemptions on payments made towards repayment of 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 category.
Tax Benefits Available Under Section 80EE of the Income Tax Act
Under this section of the Income Tax Act, first-time home borrowers 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, they must keep in mind that one can claim these Home Loan tax benefits only after the construction of the property is complete. Once the construction is complete, Home Loan borrowers can claim tax deductions on payments made toward interest repayment during the pre-construction phase in five equal instalments.
Borrowers must also know that if they sell the property within 5 years of taking possession, all income tax benefits that one could avail of will get reversed.
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How to Calculate Home Loan Tax Benefits and How to Avail of Them
If you are not sure how to calculate Home Loan tax benefits, it is best to use a Home Loan tax calculator. These handy tools are freely available online and one can use them to understand their tax obligation for each financial year.
Let us understand the process for claiming tax benefits on Home Loans:
- Collect your Home Loan tax certificate from your lender.
- If you are employed, you can claim Home Loan tax benefits in two ways. First, you can claim tax benefits by submitting your tax certificate to your employer. Second, you can claim tax benefits while filing your taxes at the end of the year.
In the case of self-employed individuals, the taxpayer is not required to submit any document. However, they must keep all documents ready in case they are asked for any.
Disclaimer
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