Owning a house is a dream that everybody wants to realize. For many of us, it is the first biggest investment of our lives that is made possible only by availing a home loan. So, if you are at a stage where you’ve finally saved enough for down payment, but are skeptical about availing a home loan, here are a few income tax benefits of home loan that’ll ease you into making an affirmative decision.
Tax Deduction on Home Loan Interest: As per Section 24, a tax deduction of up to 2 lacs can be claimed on home loan interest, provided that the property is occupied by the owner or owner’s family. However, this waiver applies only if:
- home loan was availed for the purchase of a new property
- home loan was sanctioned after 1st April 1999
- property construction has been completed within five years of availing the home loan
- In case the construction is not completed within five years, then the deduction amount will be reduced to Rs. 30,000.
- An additional deduction of Rs. 50,000 for interest paid can be availed by first time buyers.
Please note that this deduction cannot be claimed during the pre-construction stage of the property. The deduction can be claimed in five equal installments on completion of property construction.
Tax Deduction Repayment of Principal Amount: Under Section 80C, one can also claim a deduction of up to Rs. 1,50,000 on repayment of the principal amount. But to qualify for this deduction, the home loan should be taken for a newly constructed property and the property should not have been sold within five years from the time of possession.
Miscellaneous: You can also claim tax deduction on the stamp duty, registration charges, and other related expenses under section 80C. But claim these benefits within a year of making the payment.
You should also know:
- The amount of deduction that you can claim depends upon the ownership share of the property.
- In case of a joint home loan, both the borrower and co-borrower are eligible for deductions on interest amount (Section 24) and principal repayment (Section 80C).
- You can start claiming tax deduction only after the property construction is complete.
- The home loan interest certificate should be submitted to your employer, so you can get the tax benefits.
- If you don’t submit this home loan interest certificate, then you will have to calculate the taxes on your own and claim the refund.
- In case of co-owners of a property, same tax deduction benefits are extended to both the property owners.
So, buy a house and reap the many tax benefits. Moreover, if you are staying in another city on rent and your salary has HRA component, then you can claim that, as well. Buy a home, live anywhere and make the most of the favourable income tax benefits.
If you are looking for affordable luxury homes, which you can finance and buy, then please visit Provident Housing projects situated in Bangalore, Coimbatore, Hyderabad, Mangalore and Chennai.
Our completed projects include: Provident Sunworth and Provident Welworth in Bangalore. Freedom by Provident in Chennai. Under construction properties are: Provident Kenworth in Hyderabad, Provident Greepark in Coimbatore. Provident Skyworth in Mangalore.
Made to perfection at affordable pricing you can easily avail home loans against our properties. Moreover, we deliver when we commit, so you will not lose on the tax benefit. You can check our projects at READY-TO-MOVE-IN HOMES.
You can read our blog post on RERA here: HAPPY HOME BUYING