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A home loan helps you get finances to buy a home of your choice. The recent
home loan interest rates becoming affordable has paved the way for many
customers who could not buy their nests to opt for a home loan and fulfil the
dreams of an own home.
As a matter of fact, you could see prominent nationalized and private banks,
non-banking finance companies (NBFCs), home loan finance companies and much more
offering a reduced rate of interest on home loan.
Thus, not only you can avail a home loan at a lower home loan interest rate, but
you also get to avail multiple tax benefits. Yes, a home loan can help you
reduce your tax liability in many ways.
A
home loan transfer can further help you enjoy a reduced home loan interest
rate if you are paying a higher rate of interest and unhappy with the current
services of your lender.
Let’s provide you quick inputs on how you can save taxes if you have a home loan
at your disposal.
Home Loan Tax Benefits at a Glance!
Here are some of the general home loan deductions that could be claimed for a
home loan:
Deduction for Interest Paid on the Home Loan
A home loan EMI has two elements – principal repayment and interest payment. You
can claim the interest element of the EMI paid for the year as a deduction from
your total income capped to Rs.2 lakhs under the Section 24. The maximum
deduction that you can claim for self-occupied housing property is Rs.2 lakhs.
For rented properties, no upper limit is capped for claiming interest. The home
loan must be taken for the new house’s construction, and its construction should
be completed within 5 years from the completion of the financial year in which
you availed the home loan. You can claim the deduction from the year in which
the home’s construction got completed.
Deduction on Principal Prepayment
You can claim deduction under the Section 80C on the EMI’s principal aspect
maximum up to Rs.1.5 lakhs. However, to claim the deduction, the home should not
be sold within 5 years of the possession else the claimed money will get added
to your income in sale’s year.
Deduction for Registration Charges and Stamp Duty
Other than claiming the principal repayments’ deduction, a home loan buyer can
also claim the deduction for registration and stamp duty charges under the
Section 80C capped at Rs.1.5 lakhs. You need not sell your housing property
within the first five years of the purchase to claim the deduction else it will
be added back to your income in sale’s year.
Deduction for First-Time Home Buyers
You can rejoice if you happen to be a first-time home buyer. Yes, extra
deductions are allowed for first-time home buyers up to Rs.50,000 under the
Section 80E. To claim the deduction, the home loan figure should be Rs.35 lakhs
or less and property’s value should not exceed Rs.50 lakhs.
Deduction for Joint Home Loan Buyers
If you have availed a home loan jointly, each of the applicants can claim a
deduction valuing to Rs.2 lakhs each. This could become up to Rs.1.5 lakhs each
in their individual or own tax returns, and to claim this; they should be a
co-owner of the house availed on loan. As a result, a joint loan availed within
your family can assist you to claim larger benefits of the tax.
The Bottom Line
If you are eyeing to purchase a home on a
home loan, you can apply for it online
and not only get lower home loan interest rates, even avail tax benefits to manage it easily.
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