What Are The Tax Benefits You Can Avail On Home Loans

A home loan makes your dream of possessing a house a reality. But you must also know that a home loan can give you several tax benefits.

After all, don’t you want to save a few bucks on those tax payments?

If you have recently taken a loan against property, you are eligible for tax deductions under the old tax regime. You can claim deductions on your EMI payments. The new tax regime, however, offers you a lower rate without any deductions.

Here are the tax benefits you can get on your home loan EMI payments ( if you choose the older regime).

Tax Deductions On The Principal Repayment

Well, your home loan EMI consists of two parts- the principal amount and the interest. Section 80C of the Income Tax Act, 1969 allows you to claim a tax deduction on the principal repayment. It is valid for your self-occupied house.

What if you have a second house and it is empty? It will also get considered as a self-occupied house. If you have taken loans against two houses, you can avail of tax deductions on both. However, the maximum limit is Rs 1.5 lakhs.

Have you rented your house? Don’t worry. The 80C deduction is available on a rented property as well.

Moreover, you can also claim a deduction on the cost of stamp papers and other registration charges.

Deduction On Interest Payments

Your home loan interest payments are also eligible for an income tax deduction.

You can claim a maximum deduction of Rs 2 lakhs on your taxable income in a financial year. If your interest payments exceed Rs 2 lakhs, the extra amount will not be liable for tax deductions. Section 24B of the Income Tax Act allows this deduction for self-occupied properties.

So, the next time you feel sorry about the interest payments, remember that you can get tax benefits from them.

Extra Tax On Buying An Affordable House

Have you bought a house under the affordable housing category? If you have, then you can claim an additional tax deduction of up to Rs 1.5 lakhs on the interest payment in a financial year.

This deduction is available over and above the deduction under section 24B. So, you get a total deduction of Rs 3.5 lakhs on your taxable income.

Isn’t that great?

This additional deduction is available under section 80 EEA of the Income Tax Act.

Whatever the tax benefits, you need to check the loan against property interest rates before applying. It will help you save more.

Deduction Under Section Section 80 EE

Are you a first-time home buyer?

Then there is good news for you. You can claim an additional deduction of Rs. 50000 on your taxable income for the interest paid on your home loan. Well, you can claim this deduction over and above the one under Section 24.

However, you cannot claim tax deductions under sections 80 EE and 80 EEA simultaneously. Moreover, this deduction under section 80 EE is not applicable if you have taken your home loan after 1st April 2017.

Now that you know of the amazing tax benefits on your home loan repayment, you will not miss them.