As an owner of a property purchased through a Home Loan, a number of individuals know that they are eligible for certain tax benefits. Some may also know a few things about the Income Tax Act’s Section 80C and Section 24 that pertain to Home Loans.
Yet the important details are something we’re not always clear about. But knowing the tax benefits from your property can help you considerably with your savings.
Here are some of the things you need to know:
Benefit of Principal Repayment – The Details
You may be aware that as per Section 80C, a person is eligible for tax deductions on the principal repayment of a Home Loan. For that, you can use online Home Loan Foreclosure Calculators to get an approximate idea of the final amount. Moreover, as per this section, even the stamp duty and registration charges paid for the property are eligible for a tax deduction.
Hence you should look to make the payment of stamp duty and registration in the Jan-March quarter to claim the tax benefit. As per section 80C, this needs to be done within the same financial year and has a maximum amount limit to it.
Also, it is worth noting that the principal amount is looked at in the same way, whether the property is to be self-occupied or rented out. And if the property is sold before a period of 5 years, then the tax benefits claimed under section 80C over the last 5 years become taxable income, in the year of selling the property.
Interest on Home Loan
If a property is self-occupied, then in your IT returns the income from the house can be shown to be nil, with the complete interest amount shown as a loss. Under Section 24, the maximum interest that can be shown as a loss is INR 2 Lakh per annum.
However, in the case of a property that is rented out, there is no limit on the maximum interest that can be shown as a loss.
Note that benefits under Section 24 can be claimed only if the construction of the property is completed within 5 years, with respect to the end of the financial year in which the loan was taken.
A loan may be taken in an individual’s name or in the case of joint ownership, the other owner is the spouse. Usually, when a loan is jointly taken, you can be eligible to receive a higher amount as a loan. Also, the maximum interest of INR 2 Lakh can be individually claimed by both owners. This makes it a very tax efficient option.
A first-time home buyer is also eligible for a further tax deduction of INR 50,000 as per section 80 EE. But you can be eligible for this only if the maximum cost of the house is INR 50 Lakh, for a maximum loan of INR 35 Lakh.
For all of us, a Home Loan can be a huge financial burden. This makes any tax benefit you can avail on Home Loan a great stress reliever. So be sure to understand all the details of your Home Loan and the tax deductions you’re eligible to claim.
- Make An Everlasting Style Statement With Exotic Silver Earrings Collection - June 14, 2019
- Celebrities Who Use Botox Cosmetic Treatments - May 15, 2019
- To All Mothers – Special Mothers Day Gift Ideas - May 13, 2019