Owing a home is a dream coming true. The Indian government has also shown their tendency and interest to encourage the citizens to invest in a house. Due to such reasons, home loan is made available to most of the citizens. When an individual opts for a home loan he/she becomes eligible for the tax deduction if they choose home loan options. Many of the schemes like Pradhan Mantri Jan Dhan Yojana are striving to bring down the affordability and accessibility issues.
There are certain deductions which an individual can get availed with. Following are some of the deductions which he/she can make themselves avail with:
Deduction for interest paid
A home loan is availed to purchase or to construct the house. People those who opt for house under construction must ensure that construction gets completed within 5 years from the end of the financial in which the loan was availed. Interest payment and principal repayment are the two components which are to be kept in mind while paying EMI. Under Section 24 total income up to a maximum of 2 lakhs can be claimed. This deduction can be claimed from the year the house construction got completed.
Deduction of interest paid during pre-loan construction
People those who buy an under-constructed property or have not yet moved but are paying EMI’s are still eligible to claim the deduction. The Income-tax law has introduced pre-construction interest wherein individual can claim a deduction in five installments from the year the property is constructed or acquired. Otherwise one becomes eligible to claim the deduction from the house property income. However, an individual becomes eligible to cover the amount of 2 lakhs only as a claim.
Deductions on the principal repayment
Under section 80 C, the principal portion of the EMI paid for the year is allowed as deduction. Under this section a maximum amount of Rs. 1.5 lakhs can be claimed. But if an individual wish to claim this amount then the property should not be sold within 5 years of possession. In case the individual sales the house then the deduction claimed earlier gets added to the income during the year of the sale.
Deductions available on stamp duty and registration charges
During the year expenses incurred one can easily claim the deduction under Section 80C. Other than the principal repayment individual can claim a deduction for stamp duty and registration charges within overall limit Rs.1.5 lakhs.
Deductions availed to first time home buyer
One those who is a first time home buyer can avail maximum up to Rs. 50,000 under the section 80EE. If an individual wants to claim the deduction then the loan amount should be Rs. 35 lakhs or less and also the value of the property should not be more than Rs.50 lakhs. Also, there is one more condition wherein it is stated that an individual who is opting for a loan should not own any other house.
Deductions for Joint Home Loan
If an individual have applied for a joint home loan then each of the loan holders can claim a deduction for home loan interest of 2 lakhs rupees and principal repayment amount of 1.5 lakhs rupees each under the section 80C. To claim such deductions it is necessary that there is a co-owner of the property.
Following are some of the large tax benefits which can be availed if you have applied for a joint housing loan.
|Deductions||Section||Maximum deductions (INR)||Conditions
|Principal amount||80c||1.5 lakh||House should not be sold within 5 years of possession.|
|Interest||24b||2 lakh||The loan must be taken for construction or purchase of a house. Also, the construction should get completed within 5 years from the end of the financial year in which loan has been sanctioned.|
|Interest||80EE||50,000||The housing loan amount should not be more than 35 lakhs and the value of the property should not exceed 50 lakhs rupees.|
|Stamp duty||80C||1.5 lakh||The amount can be claimed in the year the expenses incurred.|