The Indian government has time and again encourage citizens to invest in a house. The government gives various tax benefits under the different sections for the Home Loan so that more and more people’s dream of having a house can be fulfilled.
Pradhan Mantri Jan Dhan Yojana has given a great boost to the Indian housing sector by striving to bring down the issues of affordability and accessibility. Here are few ways can your dream can be fulfilled by saving interest on EMI’s.
Home Loan can be taken on two kinds of Property
1. New Property Purchase
2. New Property Under Construction
Two Type of Payment during the EMI
1. Principal
2. Interest
- Principal repayment benefits will be as per Section 80C other charges stamp duty or registration charges.
- Interest benefits will be as per the Section 24.
New Property Puchase Tax Benefits
Tax benefits of up to Rs.50,000/- for interest paid on the home loan deduction are undertaken in Section 80C.
To avail tax benefits under section 80EE of Income tax act 1961 are:
- At the time of taking a loan, you must be buying your first house.
- Amount of loan shall not exceed Rs.35 lakhs
- Value of property shall not exceed Rs.50 lakhs
- The loan must be taken from Financial Institution and housing finance company
Others benefits which can be availed
- Stamp duty and registration charges Deduction
- Processing fee and service charges Benefits
New Property Under Construction Benefits
Conditions for claiming home loan deduction under 80C
- Repayment on the principal can be claimed only after the completion of the construction of a property.
- When the principal amount is actually paid then the deduction is allowed.
- After deduction is claimed, the property should not be sold before the end of 5 years of possession.
- The deduction shall be allowed only for the repayment of loan borrowed for the purposes of purchase or construction of house property.
Home Loan Tax Benefit Under Section
Section 80C
- Maximum home loan benefit of up to Rs 1.5 lakh from your taxable income on the principal repayment.
- Revenue enhancement and registration charges furthermore but will be claimed just once.
Section 24
- Tax deduction on sum equal to thirty per cent of the annual value of the property.
- Enjoy maximum deductions of up to Rs 2 Lakh on the interest amount payable. This deduction applies only to the property whose construction is finished within 5 years.
- If it doesn’t finish within this point frame. you’ll claim only up to Rs 30,000.
Section 80EE
- First-time homebuyers can claim a further Rs 50,00 on the payable interest every fiscal year.
- The equity credit line amount must not be over Rs 35 lakh.
- The property value must be within Rs 50 Lakh.
Home Loan and Tax Benefit Calculator ?
There are so many ways you can calculate the Home Loan benefits you can consult the expert on this matter or there are so many websites by which you can know the Bajaj Finserv, Axis Bank, and many more.
Can Home Loan & House Rent Allowance (HRA) Tax Benefit both be Claimed?
Example:- Deepak lives in Gurgaon and pays a rent of Rs 12,000 per month; he gets an HRA of Rs 20,000 His basic salary is Rs 50,000. He has taken a loan to buy a house in Bangalore where his parents currently live.
Interest paid on the loan for his house is Rs 25,000 per month.
He can claim HRA which is as follows – The amount of tax exemption from HRA will be a minimum of these three:
- HRA received = Rs.20,000
- 40% of Basic as Deepak lives in Gurgaon = Rs. 20,000
- Rent paid – 10% of Basic = Rs 12,000 – Rs 5,000 = Rs 7,000
HRA exempt = Rs. 7,000 Remaining HRA of Rs 20,000 – Rs 7000 = Rs 13,000 will form part of his taxable income under Salaries on account of HRA.
Calculate the House Rent Allowance from the Income Tax India Website
How to Claim Tax Benefits on Home Loan ?
The Process to say tax benefits on a home loan is very easy:-
- Residential property must be in your name. In case of a joint Home Joint Loan, ensure to be the house’s Co-Owner.
Calculate the total amount you can claim as a tax deduction.
To make can adjust in TDS give home loan interest certificate to the employer or can fil in the ITR return.
- Self employed people dont have to keep these document they need to show if asked by the authority.
If Woman Member of the Family Invests in House ?
- State governments have given a 1%-2% benefit of stamp duty if a woman is the owner of the house.
- Here are the complete details of exemption as per states.
Home Loan Tax Benefit For Second Home ?
If you already own a property and want to buy one more then tax benefits under 80EEA cannot be claimed. But now you can claim benefits under 80C and under Section 24. If the purpose of the home is an investment and you want to rent it out, in that case, you can claim the full amount of the interest component in section 24.