Know How to Get Tax Benefits on Your Home Loan

A home loan not only helps you to finance your home purchase, but it also provides you with additional benefits. Therefore, when you avail credit to purchase a house – you not only acquire an asset but also gain on exemptions on your taxable income as well. However, most borrowers are confused when it comes to claiming tax benefits for a home loan.

There are numerous tax benefits you can avail when you already have an existing housing loan and paying the current housing loan interest rates.

You can use a home loan tax benefit calculator to work out how you can save tax on your existing home loan. Let’s take a look at what you can achieve –

Key Home Loan Tax Benefits

Understand these taxation rules to utilise your home loan to the fullest –

   A. The Benefit Under Section 24(B)

You can avail home loan tax benefits on the amount which you pay towards the home loan interest under this section. Under section 24(b), you can enjoy a maximum claim limit of up to Rs. 2 Lakh provided the property is self-occupied and/or is set for completely constructed within 5 years. If not, this limit falls reduces to Rs. 30,000. But, if one doesn’t reside in that property – there shall be no limit on the amount which one can claim.

    B. The Benefit Under Section 80c

Under this section, one can claim up to Rs. 1.5 Lakh on the principal amount of your housing loan. However, the tax benefits shall be reversed if you decide to sell the property within 5 years.

    C. Home Loan Tax Benefits Under Section 80ee

This section serves as additional tax saving benefits for first-time home purchasers. For instance, you can avail a housing loan for the first time and enjoy tax exemptions of up to Rs. 50,000 additionally against the interest payments, over and above the benefits already accrued under Section 24(b) and 80C.

Pointers to Keep in Mind When Claiming Tax Benefits

    a) Under Section 24(b), you can claim tax benefits over five years in five equal installments after the construction is completed. You can take the help of a home loan tax benefit calculator to calculate the exact amount.

    b) Furthermore, if you consider claiming tax deductions on a joint home loan – it's imperative that both the individual's names must be mentioned as co-owners and co-borrowers for the property and the loan respectively. Only then will both co-applicants be able to claim tax deductions in full, separately. However, keep in mind that tax benefits depend on the share of the ownership.

You also need to submit your ownership documents of the property. Other essential documents include –
  •     Loan certificate showing the division between the principal and interest amount of EMIs.
  •     Proof of housing construction or the purchase date.
  •     Proof of municipal taxes paid.

This is everything that you need to know about saving tax when you avail a housing loan in India. So, when you’re applying for one, ensure you’re making the most out of the home loan tax benefit and boost your savings.

Know How to Get Tax Benefits on Your Home Loan Know How to Get Tax Benefits on Your Home Loan Reviewed by Bella Jonson on July 17, 2019 Rating: 5

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