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Home loan tax benefits. With Auto-Fill Income Tax Preparation Software in Excel for the All-State Govt Employees and All Non-Govt Employees for the F.Y.2021-22

Tax Section 87 A

Home loan tax benefits. Purchasing your own home is a dream come true for everyone. The Government of India has always shown a great tendency to encourage citizens to invest in a home.

 This is why a home is eligible for tax deduction under section 80C. And when you buy a home on a home loan, it comes with multiple tax benefits that significantly reduce your non-taxable benefits.

Home loan tax benefits

Many schemes, such as the Prime Minister’s Jan Dhan Yojana, is giving the green light to the Indian housing sector in an attempt to bring down the problems of affordability and accessibility.

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Home loan tax benefits

A home loan must be taken for the purchase/construction of a house and the construction of the house must be completed within 5 years of the end of the financial year in which the loan is taken.

If you pay EMI for a housing loan, it has two components –

 Interest payments, and principal payments.

The interest of the EMI paid for Financial Year can be claimed as an exemption of Rs 2 lakh under Section 24.

From the assessment year 2018-19, the maximum deduction for interest paid on the self-occupied home property is Rs 2 lakh. For leaving the property, there is no upper limit for claiming interest.

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Home loan tax benefits

However, anyone who can claim overall loss in the title of house property is limited to only Rs 2 lakh. This deduction can be claimed from the year the house is completed.

Deduction in interest paid for a home loan during the pre-construction period

Say, you bought a property under construction and haven’t gone yet. But you are paying EMI. In this case, your eligibility to claim interest on a home loan starts only after the construction is completed or if you have purchased a fully constructed property.

Does this mean that you will not get any tax benefit on the loan and the interest paid during the construction period? No.

 Let’s understand why. The Income-tax Act also provides for this type of interest claim, called pre-construction interest, as a deduction in five equal instalments starting from that year, where the property is acquired or completed, on deductions and above you otherwise claim from your home property income. Worth doing. However, the maximum qualification is limited to Rs 2 lakh.

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Salary Structure

Discount on original payment

The principal amount of the rebate under section 80C  of Rs. 1.5 Lakh.

Whether to demand this discount, the house property should not be sold between 5 years of possession. Otherwise, the previously claimed deduction will be added to your income in the year of sale.

Exemption for stamp duty and registration charges

In addition to claiming deductions for the original payment, a rebate for stamp duty and registration charges can also, be claimed under 80C but within the overall limit of Rs 1.5 lakh.

However, this can only be claimed in the year where these costs are incurred.

Additional exemption under section 80EE

Additional discounts are allowed under Section 80EE for home buyers up to a maximum of Rs 50,000. To claim this discount, the following conditions must be met

The loan amount should be Rs 5 lakhs or less and the value of the property should not be more than Rs 50 lakhs.

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And on the date of loan approval, the person is not the owner of any other house i.e.

Section 80 EE has been implemented from the F-Y fiscal year. Previously, the concession approved under Sec E0 EE was only available for 2 years for FY 2019-20 and FY 2021-22

Additional exemption under section 80EEA

Budget 2019 has introduced additional discounts under Section 80EEA for home buyers up to a maximum of Rs 1,50,000.

To claim this discount, the following conditions must be met:

The stamp value of the property is not more than Rs 45 lakh.

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On the date of loan approval, the person does not own any other home

A person claiming a deduction under this section should also not be eligible to claim a deduction under section 80EE.

Discount for a joint home loan

If taken jointly, each loan holder can claim up to Rs 2 lakh for interest on each home loan in their individual tax returns and up to Rs 1.50 lakh for principal repayment of 80C.

To claim this discount, they must be co-owners of the borrowed property.

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Tax Deduction sheet
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