Ways To Get Tax Benefits On Home Loans
26 Mar 2018
A good home loan works in an easy and efficient manner to help you own the home of your dreams. And while there are many ways to go about finding a home loan that works best for you, it is important to be aware of the several tax concessions that you can avail of while repaying the home loan.
There are three sections of the Income Tax Act under which the taxpayer can avail of benefits on a home loan.
- Section 80C
- Section 24
- Section 80EE
Here are some scenarios in which you can get tax benefits on home loans:
1. Home loan repayment with EMI plan: You can claim tax benefits on both the principal amount repaid as well as on the interest amount, under Section 80C and Section 24 respectively. Stamp duty charges, registration charges and the processing fees of the home loan are also eligible for tax deductions.
2. When the property has been leased out: In this case, the principal amount repaid remains unaffected, but the interest amount paid can be completely claimed as tax deduction. Property that has been let-out can claim deduction—without any limit-- for any loan taken for the purpose of repairs, renewal and reconstruction.
3. When the home is self-occupied, or jointly owned: When the property is self-occupied, the interest paid on loan is eligible for deduction up to Rs. 2 lakh under Section 24. The principal amount repayment of up to Rs. 1, 50,000 is eligible for deduction under Section 80C. When the home is jointly owned, you and the co-owner can claim separate tax deductions in your respective ITR.
4. When you have more than one home loan: In the case that you have more than one home loan, the tax benefits towards the repayment of principal amount are capped at Rs. 1.5 lakh. However, the interest amount paid is eligible for deduction up to Rs. 2 lakh under Section 24.
5. When you are a first-time homebuyer: Under Section 80EE, you can claim special tax benefits if you are a first-time homebuyer and if the property has been purchased for residential purposes.
6. When the loan is taken from a friend or family member: In the event that you have taken a loan from a friend or family member in order to purchase a home, then you can claim tax deductions on the interest amount paid under Section 24. However, the person from whom you have taken the loan must issue a certificate stating that you have paid the interest amount for the financial year.
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