Every borrower loves the idea of availing tax deductions on their home loan deal. Repaying a home loan is not often easy, as it usually takes several years to fulfil. Based on the lender, you can get as many as 25 to 30 years to repay the borrowed amount. So, it makes sense to want a home loan deal that promises you lucrative tax benefits.
India is a country whose government has invested heavily in enabling citizens to access certain perks— home loan tax benefits inclusive. Home loan tax benefit rely on some conditions, such as your taxable income, age, principal amount, and interest component during the assessment year.
Taking a home loan to buy or build a house means that you qualify for several tax benefits but how much do you know about this? You see, most home loan applicants know little about tax benefits. Do you know the areas where it becomes possible to claim tax deductions?
In this article, you’ll gain critical insights on all you need to know about tax benefits on home loans in India.
The Sections of the Income Tax Act for Home Loan Tax Benefits
In addition to the amazing housing schemes provided in India, the government has made provisions for tax benefits on home loans taken from either a bank or Non-Banking Financial Company (NFBC).
Below is a detailed list of which sections of the income tax act encourage tax deductions:
Section 80C (Home Loan Principal Amount)
Section 80C states that you can access a deduction as high as Rs.1.5 Lakh only once in a financial year. Asides from the principal amount, you can also save on additional costs like property registration charges and stamp duty.
Section 24(Home Loan Interest Component)
Section 24 allows you to claim deductions up to Rs.2 lakh on income tax liabilities, though the final tax deduction amount depends on the value of one’s interest payments. To qualify, you must conclude construction on the property in 5 years. If you do not do this, you can only enjoy a tax benefit of Rs. 30,000.
Section 80 EE
Under this section, only those who buy properties for the first time without having other properties to their names qualify for tax deductions. Asides from this, you must meet the following requirements:
● Your principal amount should be Rs.35 lakh or less.
● Your property should not be estimated to exceed Rs.50 lakhs.
Although not stated above, Section EE also has provisions for tax deductions. You can save up to Rs.1.5 lakhs on the payment of the home loan’s interest component. This is different from the interest-related benefit obtainable from Section 24. Until you repay the loan amount in full, you can enjoy tax savings, thanks to Section EE.
What is a Home Loan Tax Benefits Calculator?
You may know about the calculators for home loan eligibility or home loan Equated Monthly Instalments (EMIs), but there’s a calculator for calculating tax benefits and the tool delivers super fast and precise results. The home loan tax benefits calculator is an online financial tool that enables you to examine your tax deductions on current loans.
You may have acquired some knowledge of how to access tax benefits, but this calculator guarantees you simplified results. Using it eliminates the need for tiresome manual calculations. To get your results, the calculator will request that you supply for following:
● The year of assessment
● The category (male, female, senior citizen)
● Your annual earnings
● The interest component you paid within the assessment year
● The principal amount you repaid within the assessment year
How to Apply for Home Loan Tax Benefits
Below is a guide on how you can claim tax deductions on your home loan:
● Ensure that the property is in your name.
● Determine the amount to be claimed using an online calculator.
● Give your employer the home loan interest certificate so they can modify the TDS (Tax Deducted at Source).
● Failure to do so means that you will file your income tax returns.
Always Look for the Best Offer
Why do business with lenders that offer home loans at a high cost when you can switch to one that guarantees you lots of amazing benefits at no extra charge? Before applying, ensure that you do your homework and negotiate great terms with your preferred lender. If you do that, you are certain to get the best home loan offer for your needs.
