Every year, several people book their new homes with the help of a Home Loan. While a Home Loan harnesses your dream of buying a new house, it also gives you an opportunity to be eligible for multiple tax benefits.
The Government of India provides Home Loan tax benefits under the Income Tax Act of 1961. So, if you are already servicing a Home Loan or planning to borrow in the future, it is vital to be aware of all the Home Loan tax benefits as it will significantly reduce your tax outgo and help you save more.
Read on to learn more about tax benefits on Home Loans.
A Home Loan is eligible for tax deduction under Section 24b, 80EE, 80EEA, and 80C of the IT Act. Let’s get to know more in detail.
You must have taken the Home Loan for purchase or construction or repair, or reconstruction.
The deduction is available for rented & self-occupied property.
If it is a self-occupied property, the limit may be reduced to INR 30,000 in case of following situations:
If the loan is borrowed before 1st April 1999 for any purpose
If the loan is borrowed after 1st April 1999 for any purpose other than construction or acquisition
If the home construction is not completed within 5 years
The tax deduction can be claimed after the construction is completed.
Pre-construction interest is the interest paid while the property is still under construction. If you have purchased a property that is under-construction, you can claim deduction on Home Loan interest only after the completion of the construction as per Section 24 of the IT Act:
The tax deduction for stamp duty and registration charges can be claimed only in the year the said expenses are incurred.
A Joint Home Loan with a spouse or any other immediate family member can help you avail a larger tax benefit. Below are the details: