How to Get Home Loan Tax Benefits up to Rs.5 Lakh

As a prospective homebuyer, when it comes to financing your purchase, you can either do it out of pocket or by opting for a home loan. The latter is a popular choice for many, simply because it eases the financial burden incurred and offers a range of perks as well. For instance, when you opt for this instrument, you can avail of home loan tax benefits, and these can help you save a significant amount of money every year.

You can now get your dream home without any hesitation as you can avail of annual home loan tax benefit up to Rs.5 lakh. This includes deductions on the interest paid, principal repaid and other charges during the process. Considering that you can save a lot of money through home loan tax benefits, you need to be aware of the current tax provisions applicable to you. Typically, a chartered accountant should be able to advise on this, but a digital home loan tax benefit calculator can also help you prudently manage your finances. 

To understand your home loan tax benefits, take a look at the following pointers. 

Tax benefits under Section 80C

Under Section 80C you can avail of tax deduction on principal repayment made in a given financial year. The total deduction available is up to Rs.1.5 lakh and here are the different provisions to keep in mind. 

You can claim deductions under Section 80C for stamp duty and registration payments. These will fall under the total deduction limit for that year, can be claimed just once and only in the year that they are incurred. 

• You can claim a deduction of up to Rs.1.5 lakh annually, for principal repayment against home loans taken for let-out properties and self-occupied.

• To claim under Section 80C, the construction of your property must be completed.

• To claim the deduction, you must not sell your property for the next 5 years of purchasing it.

• In case you do sell your house within 5 years of its possession, the total deduction amount claimed in the previous years will be added to your total taxable income for the year that you make the sale.

Tax benefits under Section 24B

In addition to the home loan tax benefits applicable on principal repayments, the interest you pay on your home loan enjoys deductions too. Under Section 24 of the IT Act, you can claim up to Rs.2 lakh as a deduction for the interest repaid in a given financial year on self-occupied properties. In the case of a let-out property, there is no upper limit to the amount you can claim as a deduction, provided it doesn’t exceed the actual interest paid. 

On the other hand, interest deductions vary in case the property is under construction. Under Section 24B, you can claim a pre-construction interest deduction wherein the total interest paid is divided into 5 equal instalments with a maximum limit of Rs.2 lakh. However, this is only applicable if the construction is completed within 5 years, if not then only Rs.30,000 is deductible.  

Tax benefits under Section 80EE and 80EEA 

Under Section 80EE, first-time homeowners can claim a further deduction of up to Rs. 50,000 on the interest paid every year, over and over the existing Section 24 deduction. Additionally, up to Rs.1.5 lakh can be claimed by first-time homeowners under Section 80EEA, provided that you meet the requirements. Do note that you may only claim deductions under either one of these provisions and not both. 

Based on this information, it is clear that the home loan tax benefits applicable can greatly reduce the financial burden of buying a home. Being well-informed about various home loan tax benefits gives you an edge in managing your long-term financial goals and ensures sustained wealth creation. Now that you are well aware of the vast scope of your home loan tax benefits make your dreams of owning a home come true by opting for a Bajaj Housing Finance Home Loan. 

Bajaj Housing Finance Limited offers an easy application process, a competitive home loan interest rate, simple home loan eligibility criteria, a lengthy tenor up to 30 years. Apply from the comfort of your home using the Bajaj Finance E-home loan facility with minimal documentation. If you’re already servicing a home loan, opt for the easy Home Loan Balance Transfer facility on offer to avail more suitable loan terms and repay with ease. To get started apply online by filling the easy form and sharing basic information.