How can home loans help you save big on your tax

Owning a home adds more to the asset and investment portfolio of an individual, which thereby adds more to the overall development of the economy. Thereby, the Government of India takes various measures for the development of the economy and thus provides multiple tax benefits on home loans under the Income-tax act of 1961. As per the provision of the Income-tax Act, the Government offers various deductions and tax deductions on home loans. Also, keeping an eye on home loan insurance is not a bad idea. Some of these are listed as follows:

Deduction as per section 80C

Under section 80 C, of the income tax act provides tax deduction up to Rs 1.5 lakhs on the repayment of the total principal amount on the availed home loans. The home loan must be availed for the construction of a new residential home or for purchasing a house. Also, the deduction can be claimed when the construction of the house is completed within five years.

Deductions as per section 24(b)

As per section 24(b) of the income tax act, tax exemption can be claimed up to the amount of Rs 2 lakhs on the interest paid on home loans. The deduction can be availed every financial year. The benefit as per the section can be availed if the home loan is availed on or after April 1, 1999, for the purchase of a house or for construction of a building. As per the provision, if the loan is taken for an under-construction property, the interest is to be repaid during the pre-construction and post-construction period. However, no tax deduction can be claimed if the property is already under construction, and that too only in the year when the property’s construction is compelled. Borrowers can also claim a tax benefit, for the interest paid during the pre-construction period in five instalments for five years.

Deduction as per section 80 EEA

Section 80, EEA under the Income-tax Act, provides an extra deduction of Rs 1.5 lakhs on paying the home loan interest rate. As per the provision, people who have availed a home loan for the first time to buy a house, between April 1, 2019, and March 31, 2020, can avail this benefit. However, to avail of this benefit, the property of the value must not exceed Rs 45 lakhs. 

Deduction as per section 80 C on stamp duty and registration

As per section 80 C, of the income tax act provides further benefits to home loan borrowers. As per the provision the tax deduction can be claimed on the registration charges and stamp duty that are related to the transfer of the property. A tax benefit up to Rs 1.5 lakhs can be availed in the year during the year when the registration or the transfer of ownership takes place.

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Further, the home loan buyers can avail tax benefits to the maximum if he or she applies for a joint loan. When applicants opt for a joint home loan, they can avail the above-mentioned tax benefits individually. Thus dual benefits can be availed with the joint application. However, the member with which the joint loan is availed must be earning and eligible for a home loan. 

The development of a country lies in the infrastructural developmental of a country. Thereby, loans like home loans which help people avail affordable housing are a fruitful thing to work for by the Government. The authorities thus continuously work towards the betterment of the home loan policies, and thus there are various tax exemptions that can be availed on home loans. These are listed as follows:

• Section 80 C of the income tax act provides tax deductions up to Rs 1.5 lakhs on repayment of the principal amount. However, to avail of this provision, the construction of the building must be completed within five years.
• Section 24(b) of the Income-tax act allow tax exemption up to Rs 2 lakhs on the interest paid on home loans. The benefit can be availed by home loan borrowers who availed the loan on and after April 1, 1999.
• As per section 80 EEA of the income tax act, an additional tax exemption up to Rs 1.5 lakh can be availed by first time home buyers if the home loan is availed between April 1, 2019, and March 31, 2020.
• Section 80 C provides further deductions on the stamp duty and registration charges to buyers who avail homes with home loans. The deduction of up to Rs 1.5 lakhs can be availed when the transfer of ownership takes place.

Thus, the above-mentioned make it clear that availing a home loan can be an affordable deal to make, to fulfil the housing loan.