Avail Tax Benefits on Your Home Loan
When Ritesh Marathe applied for a Home Loan, he was curious about the tax benefits he would be eligible for. He was always on the lookout for ways to save tax. His financial adviser had told him about the different ways in which he could save tax and he was aware of the usefulness of the Home Loan he took to buy his dream house.
Are you looking for some tax benefits on your Home Loan too? The following points will help.
Tax Benefits Available for Home Loans under Section 80C
A borrower is eligible for tax deductions up to Rs. 1.5 lakh for the loan principal repaid. This is as per Section 80C of the Income Tax Act. This amount gets deducted from your taxable income. Thus, your total tax liability reduces. The amount of deduction you get in a year depends on your actual repayment. So, if you have paid principal amount of Rs. 90,000, that is the deduction you can avail in that fiscal year.
You are also eligible for a tax deduction on stamp duty and property registration fees. This is applicable even to people who did not take a Home Loan to buy their properties.
Tax Benefits Available for Home Loans under Section 80EE
A first-time homebuyer can get a tax benefit of up to Rs. 50,000 on Home Loan interest. This is according to Section 80EE of the Indian Income Tax Act. There are a few clauses.
- You are eligible for this tax benefit only if you took the Home Loan between April 1, 2016 and March 31, 2017.
- You cannot have other properties in your names.
- You must take the loan from a legal lender. Think a registered NFBC or bank.
- Suppose you have taken the loan from a local moneylender, then you cannot not qualify for this deduction.
- You can get tax benefits only on loans lower than Rs. 35 lakh.
- You can get tax deduction only if the house you buy costs Rs. 50 lakh or less.
Tax Benefits Available for Home Construction Loans
Suppose you have taken a Home Loan to buy, construct, renovate, or reconstruct a property. Then you are eligible for a tax rebate of Rs. 2 lakh on the interest paid. This is according to Section 24 of the Indian Income Tax Act.
Suppose a person is not living in his own property. He had to shift due to work. Can he still get this tax benefit? Yes, but only if he is living in a rented house. If he lives in another self-owned property, he cannot claim the benefit. This is an important point to remember.
The Bottom Line
You can use your Home Loan to get good tax benefits. The principal or interest repaid is deductible from your taxable income. This amount depends on your tax deduction qualification. It will help lower your IT slab. You will save a lot of tax money. Know about available deductions when you take a Home Loan. Speak to your loan provider to get a better idea of tax benefits. You will be able to buy your dream home. And also benefit financially.