Home loan tax benefit – Claim tax deduction on a home loan

Housing Loan Tax Benefit

Tax Benefits On Principal Repaid On Interest Paid
First Home – Self Occupied Actual principal repaid subject to a maximum of ₹ 1.50 Lakh can be claimed as investment eligible for tax deduction under section 80C.
  • Actual home loan interest paid subject to a maximum of ₹ 2 Lakh if the construction of the house is completed within 5 years from the end of the financial year in which the loan is taken
  • If the construction of the house not completed within five years then ₹ 30,000 is tax-exempt
  • Additional deduction of ₹ 1.50 Lakh for interest on home loan availed for purchase of Affordable houses of up to ₹ 45 Lakh till March 2020. The benefit is available till 31st March 2021.
First Home – Rented/ Vacant (deemed to be let out property) Up to ₹ 1,50,000 eligible for tax deduction under Section 80 C. The deduction is available only if the property owner is staying in a different city for work.
  • Exemption on interest is capped at lower of two, a) ₹ 2,00,000 or b) actual interest paid for all properties owned by a taxpayer.
Second Home or Additional Property None
  • Exemption on interest is capped at a lower of two, a) ₹ 2,00,000 or b) actual interest paid for all properties owned by a taxpayer
Under Construction Property None
  • The interest paid can be claimed in equal parts in five financial years post-completion or handing over of property within the overall annual limit of ₹ 2 Lakh.

Current Housing Loan Tax Exemption

The rundown of tax exceptions you can guarantee for interest on lodging advance in this year under different conditions are:

You can guarantee a limit of ₹ 2 Lakh in the event that your property is self-involved.

In the event that you have leased the property, at that point you can guarantee the genuine measure of revenue gathered on your home advance with no cutoff.

In the event of a joint home credit where the co-borrowers are additionally co-proprietors, the allowance is accessible up to the most extreme cutoff for everyone.

The greatest furthest reaches of ₹ 2 lakh is relevant if there should be an occurrence of the under-development property in particular if the development is finished inside a long time from the monetary year in which the advance is benefited. On the off chance that not, the appropriate allowance is restricted to ₹ 30,000.

How to Claim Home Loan Tax Benefit Under Section 80C?

The means to guarantee home credit tax reduction under area 80C are:

  • The tax cut under segment 80C can be guaranteed just while documenting the ITR.
  • At the hour of entering the subtleties in your ITR structure, ensure you have entered the right qualities in the different pay heads as relevant to you.
  • Then, in the segment of allowance under segment 80C figure the expense derivation you need to guarantee.
  • Since area 80C incorporates different allowances too like LIC premium, commitment to the opportune asset. You need to figure the amount of the relative multitude of derivations accessible under the segment you can guarantee.

Tax Benefit under Section 80EE

  • The tax advantage accessible under segment 80EE of the Income Tax Act is accessible on home loans authorized between first April 2016 to 31st March 2017.
  • To guarantee this allowance, the borrower ought not to claim any house on the date of loan authorize.
  • The allowance accessible under area 80ee is dependent upon a most extreme constraint of ₹ 50,000.
  • The derivation is accessible on the interest of the home loan.
  • The derivation is accessible for a home loan of ₹ 35,00,000 and beneath. Likewise, the estimation of the property ought not to surpass ₹ 5 Lakh.

Tax Benefit under Section 24B

According to segment 24B of the Income Tax Act, you can guarantee derivation on the interest of the home loan, which is profited either to build another house or for the acquisition of private property.

The derivation of home loan revenue is permitted on a gathering premise. Along these lines, you can guarantee an allowance for the interest sum for the year, if you have paid till now.

Income Tax Benefit on Home Loan for Owning Second property

In the event that you have more than one property, and both are self-involved, just one will be considered as self-involved to ascertain tax advantage on home loan and pay from house property. You have the choice to pick both of the properties as self-involved to guarantee the most extreme tax advantage.

The tax advantage accessible for self-involved property for interest on a home loan is a limit of ₹ 2 Lakh under area 24(b), while for loaned out property or considered to be loaned out, the derivation is accessible for genuine incentive with no breaking point.

Tax Benefit on Home Loan under Construction Property

For the property that is as yet under development, you can guarantee the accompanying tax advantage:

  • Derivation for head reimbursement for up to ₹ 1.50 Lakh.
  • The derivation for the interest sum can be asserted in five equivalent portions after the development is finished inside a long time from the monetary year in which the home loan is benefited.

On the off chance that the development of property doesn’t get finished inside a long time from the year in which the loan is benefited, at that point the allowance accessible for the interest on the home loan will be accessible simply up to ₹ 30,000.

How To Claim Tax Benefit on Home Loan?

Follow these steps to claim tax benefit on home loan:

  • Calculate the tax deduction of interest on a home loan you have to claim.
  • Next, you can submit your home loan interest certificate to your employer, so that the deduction can be adjusted with TDS.
  • Otherwise, you can file the ITR yourself and submit the certificate as required.
  • For self-employed, submitting the certificate is not required. However, you should keep it with you as it can be asked by the IT department.

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FAQs

How do I claim tax benefits on the home loan?

You can claim tax benefits on a home loan either while filing your ITR or submitting the home loan interest certificate to your employer.

How much of a home loan is tax-deductible?

You can claim a deduction of up to ₹ 1.50 Lakh for principal repayment and up to a maximum of ₹ 2 Lakh for interest on a home loan in a financial year.

Is Home Loan good for tax benefit?

Yes, the government wants you to take the loan and buy your own house. You can claim a deduction for principal repayment as well as for interest on your home loan.

What is the benefit of a home loan?

By availing of home loans, you are not required to pile huge amounts of savings to purchase your own house. Choosing your own money instead of a loan can get your fund to lock at a place and can take years to recover. While by availing of the loan, you can invest your savings in other areas, which will reap you higher benefit. Also, you can claim tax benefits available on the home loan.

What is the benefit of home loan transfer?

You have the option to transfer your home loan from one lender to another if the other one is providing a loan at a considerably lower rate of interest. It will help you bring down your EMI as well as overall interest outgo amount.

Can both husband and wife claim home loan interest?

If both husband and wife are the co-owners as well as co-borrower of the loan, then they both can claim deduction on home loan interest.

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