Home loan tax rebate: Have you claimed these tax benefits yet?
Purchasing your own residence is nothing short of a personal milestone. In order to encourage the citizens of our country to make residential purchases, the Government of India has introduced several subsidy schemes over the past few years.
Moreover, they have also made home loans eligible for tax exemptions. So, when you purchase a house, you can avail tax benefits against the home loan.
Tax Benefits on Home Loans
Homebuyers can claim tax exemptions as per the provisions of the Income Tax Act, 1961.
A loan EMI is divided into 2 components – the interest and the principal component. The Income Tax Act of India allows exemptions separately on both components subject to conditions as mentioned in law. You can easily calculate the exemptions with the help of an income tax calculator.
Know all about the important ways to save tax on home loans hereon –
Under Section 80C of the Income Tax Act, borrowers can claim tax exemptions of up to Rs.1.5 lakh on the annual home loan principal repaid.
Homebuyers can claim tax exemptions of Rs. 2 lakh on the annual home loan interest. Moreover, homeowners who are yet to move into their property, which may be under construction, can also avail tax benefits but under a certain condition, known as the pre-construction interest. In such a scenario, tax exemptions can be claimed in five equal instalments starting from the year in which the construction of the concerned property is completed or when the property is acquired.
As per the Finance Act 2019, homebuyers who are purchasing a house for the first time can claim additional tax exemptions of up to Rs.1.5 lakh as per Section 80EEA of the Income Tax Act (Conditions apply as per act). This exemption can be claimed over and above the tax benefits availed u/s 80C.
Tax Benefits for Joint Home Loans
Homebuyers can avail various advantages while applying for a home loan with a co-applicant; one of which is the tax benefits on a joint home loan. If your property is also co-owned by the co-borrower, both can claim tax exemptions individually u/s 80C and 24b.
Tax Benefits of Owning a Second Property
According to the finance act of 2019, homeowners can avail tax benefits on their second property as well, considering it is not let out on rent. Hence, before purchasing a second house, one should be aware of the tax savings and other advantages offered by home loans today.
Moreover, you can opt for a home loan balance transfer if you are not satisfied with your current lender’s home loan rates. You can also avail of a top-up loan for additional funds. Top up loans come without any end-use restriction which enables a borrower to use the funds as per their needs.
Hence, homebuyers should be aware of these home loan tax benefits before submitting their annual tax return. The above discussion will help you to lower your taxable income for a stipulated financial year.
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