Home Loan Tax Benefits

Check Housing Loan Tax Benefits under section 80C, 80EE/80EEA & 24

✓ Home Loan from ₹2 Lakhs To ₹15 Cr ✓ Multiple Lending Partners ✓ Interest Rates Starting @ 8.25%

Every person desires to own a home. The Indian government offers numerous tax benefits on home loans. The Income Tax Act of 1961 was enacted to encourage residents to invest in real estate. These advantages not only lower your tax cost but also assist you in better managing your financial flow. It is important to understand all of the home loan tax benefits since they may help you save a large amount of money on your tax payments.

Latest Updates From Union Budget

  • New tax exemption was proposed for Affordable Rental Housing projects to make them accessible to migrant workers.

  • An additional ₹48,000 Crores has been allocated to the Pradhan Mantri Awas Yojana (PMAY).

Tax Benefits On Home Loan (FY 2022-23)

The house loan tax benefits under the applicable sections of the Income Tax Act of 1961 are listed in the table below:

 

Income Tax Act

Maximum Deductible Amount

Section 80EE

₹50,000

Section 80C

₹1.5 Lakhs

Section 24

₹2 Lakhs

Home Loan Principal Deduction Under Section 80C

  • You can avail a tax deduction of up to ₹1.5 Lakhs every year on the principal component of your home loan. You can claim this deduction for a home loan taken for a property that either you are occupying or have rented out.

  • To be able to claim it, you should ensure that the property is fully constructed.

  • You should hold onto the house for at least 5 years to be able to claim the deduction. If you sell the home within 5 years, the deductions shall be reversed and will be counted as income for the year in which the sale is made.

Home Loan Interest Deduction Under Section 80EE

  • Under this section, you will be able to claim a tax deduction of up to ₹50,000 every year on the interest component of the home loan. Note that this can be availed over and above the ₹2 Lakhs deduction you can avail under Section 24(b).

  • The value of the property must be less than ₹45 Lakhs.

Deduction For Stamp Duty And Registration Charges

Buying a plot or home is one of the most significant events in a person's life. With growing property prices, buying a house has become one of the most expensive purchases a person makes in his or her life. Miscellaneous expenditures such as registration fees and stamp duty add to this cost. These fees are required for all new property owners in order to complete the transfer procedure. Stamp duty rates may amount to up to 10% of the property value, while registration fees are typically 1% of the property value. This extra expense places an additional pressure on property purchasers.

 

To alleviate this burden, the government has incorporated these expenditures as deductions under the Income Tax Act of 1961. These costs are allowable deductions under Section 80C of the Act. According to this provision, the highest deduction or tax benefit that a house buyer may claim for the additional expenditure of registration fees and stamp duties is ₹1,50,000, subject to the underlying requirements indicated in this section.

 

When can registration fees and stamp duty be deducted under section 80C:-

  • Only HUFs and individuals are eligible to claim this deduction on their income tax returns.

  • Deductions for registration fees and stamp duty may only be claimed in the year that the expenditures are paid.

  • The assessee must have paid the amount against these costs.

  • A claim for this deduction is only tenable or valid if the property has been completed and the owner has legal possession of the home.

  • Payment for such fees is not permitted for under construction property.

  • Another significant criteria is that the residence be owned by the taxpayer seeking the deduction.

  • Deduction is not permitted when expenditures are paid by someone else.

  • The deduction under this clause is exclusively applicable for new residential property, not commercial or resale property.

  • Section 80C allows joint owners to deduct costs in the amount they share the residential property up to ₹1,50,000 each.

  • Residential plots of land are also ineligible for section 80C deductions.

  • Any additional expenditures paid for the purpose of transferring property, such as service tax, are likewise deductible under section 80C.

  • If the housing property is transferred within 5 years after purchase, the total amount of deduction permitted is regarded to represent the assessee's income in the fiscal year or prior year in which the transfer occurred. As a result, the assessee will be required to pay tax in the assessment year of the transfer of residential property.

  • Such expenditures, however, cannot be recovered if the assessee has already inhabited the dwelling property in whole or in part.

Additional Tax Deductions Available Under Section 80EEA

  • If you availed a home loan between April 1, 2016, and March 31, 2017, you can claim a deduction of an additional ₹50,000 every year on it.

  • To do so, you must ensure that the home loan value is ₹35 Lakhs or less and the property value is under ₹50 Lakhs.

  • To avail this deduction, you must ensure that you were applying for the home loan in your name for the first time during the stipulated period.

Home Loan Tax Benefits Under Section 24

  • Section 24 allows you to deduct the interest part of your housing loan EMI paid for the year from your total income up to a maximum of ₹2 Lakhs.

  • There is no maximum amount of interest that can be claimed on rented property.

  • However, the total loss that can be claimed under the heading of House Property is limited to ₹2 Lakhs. This deduction is available beginning with the year in which the house is constructed.

Joint Home Loan Tax Benefit

If two or more people take out a joint house loan, each of them is eligible for a deduction of up to ₹2 Lakhs on the interest paid. For amounts up to ₹1.5 Lakhs each, tax can be deducted on the principle paid. To be eligible for this deduction, all applicants must also be co-owners of the property. As a result, a shared home loan may provide you with more tax benefits.

Tax Benefit On Second Home Loan

Tax incentives are available on paying interest under current legislation. You are entitled to the full amount of interest paid. To help borrowers save more money on taxes, it has been proposed that the second self-occupied home can also be treated as a self-occupied home.

How To Claim Tax Benefits On Home Loans

It is straightforward to get tax benefits on a house loan. The processes to claim your tax deduction are outlined here.

  • Step 1: Determine the amount of the tax deduction to be claimed.

  • Step 2: Check to see if the house is registered in your name or if you are a co-borrower on the loan.

  • Step 3: Give your employer your house loan interest certificate to amend the tax deductible at source.

  • Step 4: If you do not complete the preceding steps, you will be required to file your tax return on your own.

  • Step 5: You are not required to submit these documents anywhere if you are self-employed. Simply keep them on hand in case the IT staff has any further questions.

How To Calculate Tax Benefits On A Home Loan

Using an online calculator to calculate your tax benefits on a home loan is the simplest method. Simply enter your house loan information and click calculate to see a complete tabulation. The following are the details you'll need in most cases:

  • Gross Annual Income Existing Deduction Under 80C/D

  • Loan Amount

  • Tenure

  • Interest Rate

  • Loan Start Date

Home Loan Tax Benefits FAQs

  • ✔️Is a Home Loan Top-Up Eligible for Tax Deduction

    If a top-up home loan is used for the acquisition, building, or renovation of a residential property, it is eligible for tax incentives under Section 80C and Section 24. You can split the EMI and get income tax benefits under Sections 80C and 24, respectively.

  • ✔️Is tax deduction on home loan interest allowed in 2022-23?

    Yes, tax deductions on house loan interest are allowed in 2022-23.

  • ✔️Is it possible to claim tax deductions under both Sections 80EE and 24?

    If a person meets the requirements of both sections, Section 24 and Section 80EE, he or she is eligible for benefits under both. To commence the same, the person must first exhaust the Section 24 limit before claiming the further benefit under Section 80EE.

  • ✔️What are the tax deductions on a joint home loan?

    In their Income Tax Return, each co-owner who is also a co-applicant in the loan can claim a maximum deduction of ₹2,00,000 for interest on the house loan. The entire interest paid on the loan is divided among the owners in proportion to their stake in the company. It goes without saying that the borrowers' total interest claim cannot exceed the total interest paid on the loan.

  • ✔️Who can take advantage of house loan tax deductions?

    Tax benefits are available to the property owner. If the spouse is a co-borrower, they are also eligible for tax benefits. In the case of a joint loan, each co-owner has the right to sue for their share of the property.

  • ✔️The property I purchased with a home loan is still under construction. Can I claim tax benefits?

    You won't be able to claim tax deductions until the construction is finished. You can claim an aggregate of interest paid for the period prior to gaining possession after it's finished. This can be claimed in five equal instalments beginning with the year the construction is finished.

  • ✔️Is my spouse eligible for an income tax deduction in case we purchase a home together?

    Yes, in case the partner is employed with a different source of income, you can claim separate deductions on your tax forms. You can both deduct up to ₹1.50 Lakhs from your total income under Section 80C. If the house is jointly owned, each co-owner can claim interest on borrowed money deductions of up to ₹2 Lakhs.

  • ✔️What is the maximum amount tax-deductible for a Home Loan?

    An individual can claim a tax deduction of up to ₹2,00,000 for interest payments on a house loan under Section 24 of the Income Tax Act.