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Home loan finance helps in saving the tax as per the Income Tax Act, 1961 of India. Building your own house is really a big dream coming true but at the same time its EMI proves to be an expensive affair too.

Here are certain rules attached with tax benefits that you need to know:

  1. If your property is self-occupied then you can avail benefit of tax deduction upto Rs. 2  lakh.
  2. If you get or build your own property within 5 years then you get a deduction of Rs. 2 lakh.
  3. In case, construction is not completed within 5 years then you can only claim upto Rs. 30,000.

Principal Deductions

  1. For self-occupied properties a claim of Rs. 1.5 lakh can be applied as a tax deduction
  2. Claim can be applied only after you have completed the construction of your house
  3. Stamp duty and paid registration fees can also be claimed for your property under tax benefit Act
  4. If you buy a second home then there will not be any claim for tax deduction on the principal amount

How To Claim Home Loan Tax Benefit?

  1. For claiming the tax benefit on home loan finance, you need to file ITR.
  2. Tax benefit is claimed under Section 80C of Income Tax Act
  3. Fill all the valid information with legal proofs to claim tax benefit
  4. After verifying all the documents, you will get tax benefit easily

In the year 2019, the amount of interest claimed as an deduction is capped at Rs. 3.5 lakh. This deduction on the amount is allowed from FY 2019-2020 onwards. This will give an additional benefit of deduction of Rs. 1.5 lakh that is over and above Rs. 2 lakh. This applies on the interest on housing loan for a house that is valued upto Rs. 45 lakh provided that the loan is taken before March 31, 2021.

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Additional Deduction Under Section 80EEA

Additional deduction for home buyers under Section 80EEA is upto Rs. 1,50,000. The stamp value should not increase Rs. 45 lakh. The individual does not own any other house on the date of loan sanction. 

Tax Deductions On Joint Home Loan

When you opt for joint home loan then you can enjoy tax benefits on home loan finance from your taxable income individually. Maximum of Rs. 2 lakh can be claimed on the interest paid and Rs. 1.5 lakh on the interest amount. Only condition is that the applicant of the loan should be the co-owner of the residential property.

Eligibility For Claiming Tax Exemption On Home Loan

Any individual who has purchased a new house to live in or for renting out is eligible for claiming tax exemption on home loans under section 24, 80C, 80EEA, Income Tax Act 1961. You can only claim tax exemption if you are co-owner or co-borrower of the house. Once you avail the home loan, then you need to repay the principal amount along with EMI as per the tenure of the loan. With tax benefits, you can make most of the tax exemptions and buy a house of your own easily.

Is Home Loan Top-Up Eligible For Tax Deduction?

Home loan top up is eligible for tax deduction under section 24(b) and 80 C only if it is for construction of any residential property or renovation of such property.

Is Home Loan Protection Insurance Tax Deductible?

In case all the repayment is done by the borrower then the premiums that are being paid for a home loan protection insurance plan are deductible under section 80C of the Income Tax Act, 1961. 

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Shabbir Ahmad

Shabbir Ahmad is a freelance enthusiastic blogger & SEO expert. He is the founder of Shifted Magazine & Shifted News. He contributes to many authority blogs including porch, hackernoon & techcrunch.