There are many types of income tax exemptions on home loans
There are many types of income tax exemptions on home loans, millions of rupees can be saved if there is information
Upon payment of principal under section 80C, an income tax deduction of up to Rs 1.5 lakh is available
Under section 24b, tax deduction of up to Rs 2 lakh is available
If you are thinking of buying a home and you are thinking of taking a loan for that, it is very important for you to know about the tax exemption you get on a home loan. You can get tax exemption on your loan under other sections including section 80C and 24 (b). CA Abhay Sharma (Former Chairman Indore Chartered Accountant Branch) is telling you about the tax exemption on home loan.
Section 80C
When taking out a home loan, you have to pay the principal at the beginning. Upon payment of principal under section 80C in any financial year, a deduction of up to Rs 1.5 lakh is available on income tax. In addition, under this section you can claim stamp duty, registration charge and other expenses incurred while purchasing the property for tax benefit. For this you can claim a limit of up to Rs 1.5 lakh in Section 80C. This can be done in the same year in which you have spent.
Section 24 (b)
Interest on home loans is divided into two categories - pre-construction interest and post-construction interest. For the interest paid during the period of completion of construction, under Section 24b of the Income Tax Act, Rs. Up to Rs 2 lakh tax deduction is available. There is no high limit to claim interest deduction on leased property. This deduction can only be claimed from the year in which the building is completed.
Often people take out a home loan for a property under construction and later get possession of it. But home loan repayment starts immediately after taking out a loan. Such persons can claim a tax deduction of up to 5 years (in 5 equal installments) on interest up to 5 years before construction is completed within section 24b. Keep in mind that there is a high limit of up to Rs 2 lakh only under the maximum section 24b, which can be claimed.
Section 80EE
Section 80EE allows homeowners to claim an additional deduction of Rs. 50,000 (Section 24) on the interest on home loan EMI. However, the loan is Rs. 35 lakhs and the value of the property should not exceed 50 lakhs. In addition, a person should not have any other assets registered in his name at the time of loan approval.
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Section 80EEA
In last year's budget, an additional tax exemption of Rs 1.5 lakh was announced on interest payments on home loans taken between April 1, 2019 and March 31, 2020. The stamp duty value of the property for tax exemption under section 80EEA should be up to Rs 45 lakh. This discount can only be taken by a first time home buyer. In the Budget 2020 announced a few days ago, the benefit of this section has been increased for one year and now the benefit of tax exemption under this section will be extended till March 31, 2021.
Tax deduction on joint home loan
Both the borrowers can take interest deduction of up to Rs 2 lakh per annum under section 24b, while the principal amount can be deducted up to a maximum of Rs 1.5 lakh per annum under section 80C.
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Applying for a joint home loan will enable the borrower to avail various income tax benefits. However, both will be able to take the tax benefit separately only if they also have an owner with the app.
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