Buying an own home in one’s lifetime is one of the major wishes of anyone’s life to come true. Even the Indian Government has expressed a preference to support its people to endow in a home.
Not only investing in a home lets you call a space your own, but even the availing of a house loan is eligible for tax deductions. Section 80C of the Income Tax Act lets you enjoy income tax deductions. Hence, when you buy a home using a housing loan, it comes laced with multiple tax advantages to lessen your tax outgo.
You can use the income tax calculator with home loan facility to compute your income tax deductions on many loan features. The facility is available at many leading financial websites and apps free.
If you are unaware of some income tax exemptions on availing a home loan, let this post help you know more. Read on!
- Income Tax Deduction for a Home Loan paid Interest
A home loan should be taken to buy or construct a home, and the construction of the same should be completed within 5 years. It should be from the culmination of the fiscal year in which the loan was sanctioned. Anyone repaying a home loan EMI knows about the principal repayment and interest repayment. The EMI paid for the interest part for the year could be treated as the deduction from the income. The maximum amount allowed is Rs.2 lakh as per Section 4. For self-occupied property, the maximum deduction for interest paid for assessment year 18-19 is Rs.2 lakh.
- Income Tax Deduction on Principal Repayment
A home loan applicant or home buyer on housing finance is allowed (the principal part of the EMI paid/year) allowed as the cut under Section 80C. The final amount that you can claim is up to Rs.1.5 lakh. To claim this deduction, the property should not be sold within 5 years of possession. Else, the claimed deduction will again be added to your income in the sale year.
- Stamp Duty and Registration Charges’ Deductions
Besides claiming the discussed two major income tax exemptions on your home loan, you can also claim the same for stamp duty and registration charges. If you are an employee, you will need out to fill Form 16. The provision is available up to Rs.1.5 lakh as per deduction under section 80C. You can ask for these deductions only in the year in which these expenses happened.
- Income Tax Deductions for First-Time House Buyers
It is the time to rejoice if you have purchased your first home. Section 80EE lets you pocket a maximum amount of up to Rs.50,000 for first time home buyers. To qualify for this income tax deduction, the availed home loan should be Rs.35 lakh or less. Also, the value of the property should not go beyond Rs.50 lakh. Your loan must have been approved and disbursed between 1st April 2016 and 31st March 2017. The loan applicant should not have any other home on his/her name on the day of the sanctioning of the loan.
Section 80EE has been reintroduced and is effective from the financial year 2016-2017. Earlier, the permissible deduction that was allowed under Section 80EE was available for 2 years, i.e., the financial year 2013-14 and financial year 2014-15 only.
The most important income tax exemptions for buying a dream home with the help of the home loan are now discussed.
You can apply for it as per your current situations and enjoy income tax deductions. As a result, it can lessen your income tax as well as your home loan burden to an extent. Happy home loan application and tax savings to you!