It is a dream of everyone to have their own house. And the government has always tried to support these dreams of their citizens to have personal accommodation. So to encourage more people to buy houses, the government has allowed the home loan for tax deduction under section 80C. Thus if you buy a house through a home loan, then you can get tons of home loan tax benefits, which reduces your net tax payment per year. Multiple government schemes like Pradhan Mantri Awas Yojana, Pradhan Mantri Jan Dhan Yojana, etc., are significantly eliminating the biggest house-related issues like affordability and accessibility.
Tax Deduction On Payment Of Interest On Home loans
If you have taken a home loan for construction or purchase of a house, then it should be done within 5 years from the ending of the financial year when the loan is approved. Most people prefer to repay these home loans in EMIs, which include payment of interest along with the principal amount. This interest could be deducted from your total income under Section 24, and the maximum deduction you can get is up to Rs 2 lakhs.
Tax Deduction On Payment Of Interest In Pre Construction Period
Have you taken the home loan for the construction of a house or have bought a property that is under development, but still you have to pay monthly EMIs. In such situations, you could be eligible for a tax deduction on payment of interest only after completing the property’s construction period.
There are no tax benefits available during the construction of house property. Thus the interest during pre-construction is divided into five equal instalments according to the income tax law. These instalments begin from the year of completion of construction and are along with your monthly income tax deduction on interest.
Tax Deduction On Payment Of Amount
The tax deduction is also allowed on the repayment of the principal of the home loans under section 80C. However, the maximum amount of deduction that you can claim is up to Rs 1.5 lakhs on the principal amount. These benefits on income tax are only available only if you don’t sell the house within 5year of purchase or construction.
Tax Benefits On Payment of Stamp Duty And Registration Charges
Apart from getting a deduction on repayment of principal and interest, you can also avail of tax benefit on extra expenses like stamp duty and registration under section 80C. Though the amount of deduction on such charges is limited up to Rs 1.5 lakhs, it could only be claimed in the expenses’ sustaining year.
Additional Income Tax Benefits Under Section 80EE
There is a certain amount of deduction allowed to every buyer of the house which could range up to Rs 50000. However, these claims are available only when the amount of home loan is between Rs 35lakhs to Rs 50 lakhs. And the date of approval of the loan must be from 1st April 2016 to 31st March 2017. Another crucial factor for these deductions is that you cannot be an existing house owner during the loan’s approval.
Thus, the government has provided all these deductions on home loans which could help you to save money on yearly income tax payments. But it is crucial to know that recently notional rent from your second self-occupied house property has been added to the net taxable incomes.