Taking a home loan can help you save tax as per the provisions of the Income Tax Act, 1961. You can claim a deduction for principal repayment, a deduction for stamp duty and registration charges of a let-out or self-occupied property under Section 80C. The total limit, however, is Rs 1.5 lakh. While most of you must be aware of this, you may not know about other sections of income tax laws that let you avail of deductions with your home loan.
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Let's take a look at how you can make the most of these benefits with your home loan:
Section 24
Section 24 of the Income Tax Act allows homeowners to claim a deduction of up to Rs 2 lakh on home loan interest if the owner or his family reside in the house property. The entire interest is waived off as a deduction when the house is on rent.
Section 80EE
This section gives tax benefits on the interest portion of the residential house property loan availed from any financial institution. Under this, a deduction of up to Rs 50,000 is given. However, this is applicable only when the amount of loan taken is Rs 35 lakh or less, and the property’s value does not exceed Rs 50 lakh. Also, the loan must have been sanctioned between April 1, 2016, to March 31, 2017.
The advantage of this deduction can be taken till the time the payment of the loan continues.
Section 80EEA
Under this, first-time homebuyers after exhausting their limit under Section 24, can claim deductions regarding home loans taken for affordable housing with a limit of Rs 1.50 lakh. The stamp duty of the property should not, however, exceed Rs 45 lakh under this clause. Also, a homebuyer availing of benefits under Section 80EE cannot claim benefits under Section 80EEA.
The loan should be sanctioned during the period April 1, 2019, and March 31, 2022. The taxpayer should be a first-time home buyer. The taxpayer should not own any residential house property as of the date of sanction of the loan.
Deduction for a joint home loan
If the loan is taken jointly and the two are co-owners of the property, each loan holder can claim a deduction for home loan interest up to Rs 2 lakh each and principal repayment under Section 80C up to Rs 1.5 lakh each in their tax returns.
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