Home Loan Tax Benefit — Income Tax Benefit on House Loan
A home loan is a significant financial commitment that helps you fulfil your dream of owning a house. However, the benefits of a home loan are not limited to owning a house. Home loan tax benefits are a crucial aspect of this financial commitment. In this post, we will discuss some of the amazing home loan tax benefits you must be aware of:
What is a Home Loan Tax Benefit?
A home loan tax benefit is a deduction that you can claim on the interest and principal repayment of your home loan. The Income Tax Act, of 1961 provides several tax benefits on home loans to encourage people to buy homes. These tax benefits can help you reduce your tax liability and save money.
Types of Home Loan Tax Benefits
There are mainly two types of home loan tax benefits that you can claim — deductions on interest paid and deductions on principal repayment. Let us look at these in detail.
Deductions on Interest Paid
Under Section 24 of the Income Tax Act, you can claim a deduction of up to INR. 2 lakhs on the interest paid on your home loan. This deduction is available only on a self-occupied property. If you have taken a home loan for a property that is not self-occupied, then there is no limit on the amount of interest that you can claim as a deduction. However, the deduction is allowed only for the interest paid during the financial year.
To claim this deduction, you need to submit the interest certificate provided by the lender to the Income Tax Department. The certificate should contain details of the interest paid and the principal amount of the home loan.
Deductions on Principal Repayment
Under Section 80C of the Income Tax Act, you can claim a deduction of up to INR. 1.5 lakhs on the principal repayment of your home loan. This deduction is available only for a self-occupied property. The principal repayment includes the amount paid towards the home loan EMI.
To claim this deduction, you need to submit a certificate provided by the lender to the Income Tax Department. The certificate should contain details of the principal amount paid during the financial year.
Deduction on Stamp Duty and Registration Charges
Under Section 80C of the Income Tax Act, you can claim a deduction on the stamp duty and registration charges paid during the purchase of a house. The maximum deduction that you can claim under this section is INR. 1.5 lakhs.
Joint Home Loan
Home loan tax benefits are an essential aspect of a home loan that can help you save money and reduce your tax liability. Using an Income Tax calculator to calculate the home loan tax benefit can keep the process easy and save you time. It is crucial to be aware of these tax benefits and claim them appropriately to maximize your savings. Therefore, if you are planning to take a home loan or have already taken one, make sure to take advantage of these home loan tax benefits to save money and fulfil your dream of owning a house.
If you have taken a joint home loan with your spouse, then both of you can claim tax benefits individually. You can claim a deduction on the interest and principal repayment based on your share in the home loan.