Owning a house is a big dream for every common man.. While everyone can’t afford the amount for constructing houses on their own home loans(popularly known as housing loans) can help them in turning their dreams into reality.
Housing loans can be availed for the construction of new homes, and also for extension of existing homes. Along with supporting your housing dream, housing loans can also help in saving your hard-earned money from taxes.
Here are some important tax benefits for home loan borrowers:
The benefit is applicable for home loans taken for purchase/construction of a house, and the construction should be completed within 5 years from the end of financial year (of which loan is taken)
According to Section 24(b) of Income Tax Act
a) Interest incurred on capital borrowed for the purpose of acquisition or construction of house property shall be allowed as deduction up to Rs. 2 lakhs
b) In respect of let-out property, actual interest incurred on capital borrowed for the purpose of acquisition, construction, repairing, re-construction shall be allowed as deduction.
c)In respect of self-occupied residential house property, interest incurred on capital borrowed for the purpose of reconstruction, repairs or renewals of a house property shall be allowed as deduction up to Rs. 30,000.
Subject to certain conditions,the entire amount of interest paid or payable on borrowed capital shall be allowed as deduction. Pre-construction interest shall be allowed as deduction in 5 annual equal installments
As per Section 80C of the Income Tax Act,the amount paid as Repayment of Principal Amount of Home Loan by an Individual/HUF is allowed as tax deduction under Section 80C of the Income Tax Act.
The maximum tax deduction allowed, however under Section 80C is Rs. 1,50,000.
Section 80C of the Income Tax Act ,also allows Stamp Duty & Registration Fee ,as tax deduction even if the Assessee has not taken Loan.
However the catch here is that the tax benefit under this section will be allowed only after the construction is complete and the completion certificate has been awarded.
Each borrower of the joint home loan can claim a standalone deduction of upto Rs.2 Lakh on Interest, and upto Rs. 1.5 Lakh on Principal Payment.
i) Section 80EE:
In the recent budget of 2021-22 , it had been announced that
Tax benefits can be claimed from Section 80EE.
The section allows a deduction of up to Rs. 50,000 per financial year as per this section.This is applicable for on the interest portion of the residential house property loan availed from any financial institution.
However the amount of loan taken should be Rs 35 lakhs or less and the value of the property does not exceed Rs 50 lakhs.
ii) Section 80EEA:
The section is applicable only for home buyers for maximum up to Rs 1,50,000. The stamp duty also shouldn’t exceed Rs. 45 Lakhs.
However the section isn’t allowed to make a claim under Section 80E
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