Home Loan: Due to rising real estate prices in India, buying a house has become difficult for many people. In such a situation, home loan not only gives a chance to become the owner of the house but also helps in saving tax. Know here how much and how you can save tax on home loan.
Home Loan: Due to rising real estate prices in India, buying a house has become difficult for many people. In such a situation, home loan not only gives a chance to become the owner of the house but also helps in saving tax. Many sections under the Income Tax Act 1961 provide tax benefits related to home loans. These can reduce the cost of buying a house to a great extent.
1. Exemption on the principal amount of home loan (Section 80C)
Under Section 80C, you can claim a deduction of up to ₹ 1.5 lakh annually on the principal amount of home loan. Apart from this, expenses like stamp duty and registration fees while buying property can also be included in this limit.
2. Exemption on home loan interest payment (Section 24)
Under Section 24, a deduction of up to ₹ 2 lakh can be claimed on the interest payment of home loan on a self-occupied house purchased for one’s own residence. However, interest paid in excess of this limit can be adjusted in the next years.
3. Additional exemption on buying affordable house (Section 80EEA)
If you are buying an affordable house, you can avail an additional exemption of up to ₹ 1.5 lakh under Section 80EEA. This exemption is in addition to the exemption of ₹ 2 lakh available under Section 24. Overall, you can claim a deduction of up to ₹ 3.5 lakh.
Who can avail the benefit
- The home loan must be sanctioned between 1 April 2019 and 31 March 2022.
- The stamp duty value of the property should not exceed ₹ 45 lakh.
- This facility is only for those who do not have any other residential property.
4. Exemption for first time home buyers (Section 80EE)
Under Section 80EE, first time home buyers get an extra exemption of up to ₹50,000 on interest payment. There are eligibility rules for this. Like the loan should have been sanctioned between 1 April 2016 and 31 March 2017. The property price should not exceed ₹50 lakh and the loan amount should not exceed ₹35 lakh.
How can you make maximum savings?
By understanding all these rules and planning your home loan correctly, you can reduce your tax expenses. Along with saving tax, the dream of owning a house can also be fulfilled with a home loan. Home loan is not only the best option for buying, but also helps in saving tax.
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