Table of Content
- Self-occupied property
- Tax benefits available through a home loan?
- Additional deduction under
- A Quick Guide to Securing a Better Interest on Home Loans
- Home Loans Tax Benefits: Exemptions Under Section 80C, 24(b), 80EE, & 80EEA
- Important Factors that Affect Your Home Loan Interest Rate
- Today's Best Mortgage Rates
Now calculate your home loan tax benefit at the click of a button, all thanks to Kotak Mahindra Bank’s Home Loan Tax Benefit Calculator. No, interest paid on home loan is not part of section 80C of the Income-tax Act. Deduction up to Rs 1.5 lakh under section 80C can be claimed on the principal amount repaid on a home loan. Budget 2022 has not extended the deduction available under section 80EEA.
Section 80EE provides an additional deduction of up to Rs.50,000 for first-time homebuyers who are servicing a home loan that was sanctioned between 1 April 2016 and 31 March 2017. To be eligible, your principal should not exceed Rs.35 lakh and the property’s value should be less than or equal to Rs.50 lakh. Tax saving on home loan makes property purchase a worthwhile investment.
Self-occupied property
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On purchase of property with home loans, borrowers enjoy a variety of deductions on their income tax liability. These deductions against the tax could be claimed under four sections of the income tax act, namely Section 80C, Section 24, Section 80EE and Section 80EEA. One of the primary benefits of home loans is that you get to enjoy substantial tax rebates, which significantly reduce your tax outgo. If you already have a home loan, you can claim home loan tax benefits under various sections of the Income Tax Act, including Section 24, 80C, 80EE, and 80EEA. Some people opt for a Joint home loan with their family members, spouse, parents, etc, as the co-borrower. In such cases, both applicants can enjoy the same benefits related to tax exemption.
Tax benefits available through a home loan?
Also note that the deduction does not apply to under-construction properties, and you can claim tax benefits only after construction is completed. Under Section 24B, you can claim additional tax benefits for home loan interest payments. But irrespective of the number of self-occupied houses on which you have taken the home loans, the interest deduction for both houses taken together will be restricted to Rs 2 lakh per financial year. Can I claim tax benefits if I plan on constructing the house and selling it in a few years?
Under this section you are allowed to enjoy tax benefits on the interest amount and up to Rs. 2 lakhs. So, all home loan related deductions put together can help you help you get a maximum deduction of Rs 5 lakh (Rs 2 lakh u/s 24, Rs 1.5 lakh u/s 80C and Rs 1.5 lakh u./s 80EEA) if it meets the specified conditions. If you are planning a to buy a new house you can plan your purchase in such a way that your loan helps you get maximum deduction.
Additional deduction under
Check and compare interest rates offered by lenders to make an informed decision. You will need to provide this form to your employer along with the home loan statement bearing signature and seal of the competent banking official. There is one thing you need to remember that you must keep all the bills and invoices of the home renovation as the proof of renovation cost to declare the TDS on loans taken for Home Renovation or improvement. Here are a few questions that you should ask yourself if your lease is about to expire and you want to buy instead of spend another year or two renting. The loan amount should be Rs 35 lakh or less, and the property value should not be more than Rs 50 lakh. However, it may only be claimed in the year in which the expenditures are spent.
The lender’s interest income would also be taxed, based on this document. Borrowers must also note that if they have paid more than Rs 2 lakhs as interest in a year, they have the option to carry the additional expense forward for another three years, to set off the losses. This option is available to only those property owners who are generating income from the house property. Deductions for home loan interest repayment are offered under various sections of the income tax law. For a hassle-free process to avail of a home loan, make sure you have all the necessary documents with a good CIBIL score. The various tax benefits mentioned above would also lessen the debt burden.
A Quick Guide to Securing a Better Interest on Home Loans
Remember that this limit is also competed for by other tax-saving instruments like EPF, PPF, life insurance, etc. So if you take one home loan, the limit is Rs 1.5 lakh for the principal repayment tax rebate. Even if you have a second home loan, the maximum deduction for principal payments will still be Rs 1.5 lakh. We have already discussed the tax exemptions available on the types of properties owned by the borrower. Let’s illustrate with a hypothetical situation- if the borrower is staying on rent and has also booked a property availing a housing loan from the bank.
Over and above the deduction you are ordinarily able to claim from your house property income, a deduction in five equal instalments beginning with the year the property is bought or construction is finished is permitted. The amount of money you will be saving on your home loan depends on different factors, such as ownership of the housing property. For a self-occupied property, there is a limit of Rs. 2 lakh under Section 24. Under Section 80C, you are eligible for deductions up to Rs. 1.5 lakhs and under Section 80 EE, deductions are limited to Rs. 50,000. Tax exemption is a basic calculation that considers your income, the principal amount of the loan, current tax implications, and interest rate.
Mortgage insurance policies are eligible for a deduction following many of the rules set forth by the IRS to govern mortgage interest deductions. To qualify for a deduction, the insurance must have been paid on a primary residence for a loan that was originated between 2007 and 2013 as of the 2013 tax year. Homeowners who are thinking about taking the deduction need to itemize it on their personal tax return. The only exception to that rule is if proceeds from a home loan were used for business purposes. In that case, you would deduct the interest on your business tax return. Additionally, you are eligible to designate a second home as your primary residence in a given year as long as it meets the guidelines set forth by the IRS.
Previously, only one property could be considered self-occupied, and a second house was thought to be rented out, and therefore notional rent was computed and taxed as income. That’s why the government has given many home loan tax benefits to ease the burden. These benefits reduce the overall principal amount that you have to pay.
Over and above the deductions claimed on the payments made toward principal and interest repayment, one can also claim tax benefits on the stamp duty paid for the acquisition of an under-construction property. Borrowers can claim deductions up to the limit of Rs.1.5 Lakh on payments made toward stamp duty and registration charges. However, one can make this claim only after the construction on the property has been completed.
Section 24 also allows buyers to avail of deductions, even if the buyer has used fund from his own sources to make the purchase, without seeking any home loan. Under the section, a flat 30% deduction on the net annual value of a property is available to the owner, if the house is purchased entirely using the buyer’s personal funds. However, this rebate will not be available if the property is self-occupied, since such properties do n0t have any net annual value under the existing tax laws. Home buyers enjoy income tax benefits on both, the principal and interest component of the home loan under various sections of the Income Tax Act 1961.
Home Loan EMI Calculator
Section 80EE allows income tax benefits on the interest portion of the residential house property loan availed from any financial institution. You can claim a Home Loan Interest Deduction of up to Rs. 50,000 per financial year as per this section. The deduction under 80EE is applicable only to individuals which means that if you are a HUF, AOP, a company, or any other kind of taxpayer, you cannot claim the benefit under this section.
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