Owning a house is every individual’s dream. A home loan is the most trouble-free and simple way to buy a home for your family and loved ones. For people who don’t have enough funds to buy their own home can borrow a home loan to buy their dream home. Equally, the Government provides various tax benefits under the Income Tax Act of 1961. But before landing into the soup, it is important to be aware of all the home loan tax benefits as it can help you save a significant amount of your tax payments. Further, read on these Tax benefits on home loan 2020 to make the most of it…
Under section 80C of the Income Tax Act, a tax deduction of a maximum amount of up to Rs 1.5 lakh can be availed per financial year on the principal repayment portion of the EMI. This consideration can only be availed after the construction of the property is complete.
Tax deduction under section 80C can be claimed for stamp duty and registration fees as well but it has to be within the overall limit of Rs 1.5 lakh applied to principal repayment. This advantage can be availed regardless of whether you take a home loan or not. Equally, this benefit can only be availed in the year these expenses are incurred.
In addition to the deductions mentioned above, there are further benefits or advantages available for first-time buyers under section 80EE where you can plea an additional interest amount of up to Rs 50,000 annually until your loan is repaid. Further, the loan amount should not exceed Rs. 35 lakh and the value of the asset should be less than Rs. 50 lakh.
In order to utilize the available deductions to the fullest, it is advisable to apply for a joint home loan. As each person can claim interest deduction up to Rs 2 lakh and tax deduction on the principal up to Rs 1.5 lakh which doubles the number of deductions available when correlated to a loan taken by a single applicant. It is however required that both the applicants should be co-owners of the property.
Other than benefits available for principal repayment, you can avail deduction on the interest paid on your home loan under section 24 B of the Income Tax Act, 1961. For a self-occupied house, the maximal deduction of Rs 2 lakh can be claimed from your gross income annually provided the construction of the house is completed within 5 years. In case the construction period outpaces the stipulated time frame, you can claim deductions of only Rs 30,000 annually. On the other hand, if you have let out your property on rent, the entire amount of interest paid on your home loan can be claimed as a tax deduction. Additionally, there is no time limit stipulated within which the construction of the property should be completed.
In a situation, where you have taken a home loan and are staying at a rented residence at the same time. You can account for all the tax deductions pertaining to home loans as well as avail benefits of your House Rent Allowance.
As per the financial budget 2019, the Government has implemented further incentives for investing in house property. Earlier, only one property could be treated as self-occupied and in case of a second property/unit, notional rent was determined and charged as income. This charging of rent on the second self-occupied asset has been put off in the current financial budget. Thus, helping borrowers to save more in the form of taxes…
Our Government has always shown a great inclination to embolden citizens to invest in a house. The above-mentioned home loan tax advantages help borrowers save substantial aggregate of money every year.