A home loan is an offering that many rely on to take that first crucial step towards becoming homeowners. This provision is a smart option as it usually extends a sizable loan amount to you for a lengthy tenure at cost-effective interest rate. You can thus facilitate a big-ticket purchase in a budget-friendly manner. What’s more, you get access to an annual home loan tax benefit, and this includes deductions on interest repayment, principal repayment, and more.
Considering the amount of money you can save while repaying your , it is important to know more about these tax benefits. This way, you know exactly how much you qualify for and if there are any special tax provisions that apply to your profile. In fact, knowing this information is key to using digital tools like the home loan tax benefit calculator effectively.
To help ensure you’re well informed, here are the tax benefits on a home loan that you should be aware of.
Deduction under Section 80C for stamp duty and registration fees
In addition to principal repayments counting toward your deductions, under Section 80C, you can also claim stamp duty and registration fee payments. These must be claimed in the year they are incurred and will be subject to the overall limit of Rs.1.5 lakh that Section 80C offers you. You may not claim them more than once and after the year has passed.
Deduction under Section 80C for principal repayment
Under Section 80 of the IT Act, 1961, you can claim a deduction of up to Rs.1.5 lakh every year towards the principal repayment of your home loan. This is applicable to both self-occupied and let-out properties, but it is crucial to have completed the construction in order to enjoy the home loan tax benefit.
Moreover, to claim the deduction, you aren’t allowed to sell your property for at least 5 years after possessing it. In case you do sell it, any deduction you’ve claimed up till the year of sale will be reversed and added to your income in the year of sale.
Under Section 80C of the IT Act you can claim tax benefits on home loan interest repayment for both self-occupied and let-out properties. In case of a self-occupied property, you qualify for up to Rs.2 lakh as a deduction each year. For a let-out property, there is no limit on what you can claim as interest but Rs.2 lakh is the overall loss that you can claim under the head of House Property.
Do note that the deduction of Rs.2 lakh is only applicable if the property is purchased or constructed within 5 years, commencing from the end of the financial year in which the home loan was availed. If the construction is still underway, the maximum limit you can claim is Rs.30,000. For let-out properties that are still under construction there is no limit, and you can claim any amount paid as interest as a deduction.
Deduction under Section 80EE and 80EEA for first-time homeowners
As mentioned earlier, there may be special loan provisions available to you when you repay your home loan. First-time homeowners can get an additional deduction of up to Rs.50,000 through Section 80EE and up to Rs.1,50,000 through Section 80EEA on the interest repaid every year. This brings the total deduction amount up to Rs.4-5 lakh. In case you are claiming deductions under Section 80EE you won’t be able to benefit from Section 80EEA.
A housing loan offers immense tax-saving options. Being able to get a deduction of up to Rs.3.5 lakh per year, or higher if you’re a first-time homeowner, is incredibly advantageous. You can even multiply your by borrowing jointly with a co-applicant. However, you should also compliment your tax savings with optimal borrowing. A good way to achieve this is to opt for a home loan from Bajaj Housing Finance Limited.
Through it you get access to a sanction of up to Rs.3.5 crore to purchase or construct the home of your dreams. This sanction is available at an attractive housing loan interest rate and for a flexible tenor that ranges up to 30 years. You can thus tailor repayment to match your income and keep your outgo manageable. This offering is also easy to avail as you only need to meet the simple loan criteria and submit minimal documentation to get the loan processing underway. For quick access to these features and to get the home tax benefits that come with it, apply online today!