Thursday, September 20, 2018

Home Loan Tax Benefits That You Should Know

money for dream home
With the constant rise in real estate prices, it’s become almost impossible for an individual or a family to purchase a house without the help of a home loan.While many are apprehensive about taking a loan because of the kind of interest rates that they come with, what most people are unaware of are the tax benefits that you can enjoy on home loans. If you’ve got a mortgage on your house, you can avail of benefits and deductions under 3 separate sections of the Income Tax Act.

Deduction Under Section 80C: 

If you’ve taken out a loan to purchase a home for which the construction is complete, and you have the completion certificate, you can enjoy deductions on the amount you pay towards repaying the principal amount of the loan. This clause is only applicable for individuals or Hindu Undivided Families (HUF). The maximum deduction under this section is Rs. 1.5 lakhs. It’s important to remember that deductions will not be valid on any repayments made before the construction is complete.

Even if you haven’t taken a loan to purchase a house, you can still enjoy deductions on the amount that you have paid towards the stamp duty and registration fee of your new home.

Deduction Under Section 24: 

When you’re repaying a loan, you will pay a certain, fixed amount to the lender every month as your Equated Monthly Installment or EMI. Your EMI amount is calculated based on the loan amount, the rate of interest, and the tenure of the loan. Typically, your EMI is made up of a principal repayment amount, and an interest amount. The interest amount that you pay is exempt from tax under Section 24 of the Income Tax Act. You can claim this deduction at the start of the year in which the house’s construction is completed. This benefit is also available if you’ve utilized the loan to repair or reconstruct an existing property.Additionally, if you’ve rented out your home, you can claim for a deduction for the interest amount paid all through the year.

Deduction Under Section 80EE: 

When you apply for a home loan to finance your first-ever house, you can get additional tax benefits on the interest payment sunder this section. To claim this deduction, you will be required to provide a statement from your lender which clearly indicates the total amount payable, your principal amount, and the amount paid towards your interest. The maximum deduction you can claim under this section is Rs. 50,000.

Now that you know about the various deductions and claims you can enjoy when you take out a property loan, you should easily be able to determine which benefits apply to you and which ones don’t. If you’re still having trouble understanding how to figure out the deductions, you can use an online tax benefit calculator. The calculator will help you understand how much money you can save despite the fact that you have to pay interest on the loan amount.

Over the years, home loans in India have helped numerous families find the home of their dreams. With so many additional tax benefits to home loans, it’s getting easier for young individuals to put aside enough money for a down payment and then secure a loan to help themselves find their own little place in the world. So, it’s time to put all your worries to rest, and fill out that application for a loan. Your dreams are counting on it.

No comments:

Post a Comment