When we talk about home loans, the first thought in mind is of owning your dream house. There are no issues in thinking like this. However, the problem starts when this thought overtakes the other aspects of the loan. Along with instant funds, a home loan can also provide you with certain tax benefits. That means while living in your dream house, you can save more and easily pay your EMIs.
But in order to claim the available tax rebate on home loan, you first need to know about them. Here are the tax benefits you can avail of on your loan.
Tax Benefits you can Avail of on your Home Loan:
1) Up To ₹1.5 lakh Deduction On Repaying The Principal
The first tax benefit on your home loan falls under Section 80C. It states that you can get up to ₹1.5 lakh tax rebate by repaying your home loan’s principal amount. A few points to remember in this advantage are:
- It is only valid when you purchase or construct a residential property.
- The construction process must not exceed five years, beginning from the end of the financial year of taking the loan.
- If you transfer or sell the property within the first five years of the loan, all the claimed tax will get reversed into your income.
2) Up To ₹2 lakh Deduction On Paying The Interest
You can claim a tax rebate on the payment of interest on your home loan as well. This advantage is divided into two categories:
- Post-Construction: Under Section 24b, you can get a tax rebate of up to ₹2 lakh for a self-occupied property. You can avail of this benefit from the year when the construction of the house gets complete. If it is a let-out property, there is no specific limit of interest claim. But the head of the house property can only get an overall deduction of ₹2 lakh.
- Pre-Construction: Section 24b has a benefit for under-construction property loans as well. The interest paid during the pre-construction period gets a tax rebate in five equal installments. You can claim this for up to five years of construction.
3) Benefit On Home Loans Taken In Specific Periods
If you have drawn a home loan in the financial year 2016-17 or 2019-20, there is good news for you. Under Section 80EE for 16-17 and Section 80EEA for 19-20, you can claim a tax rebate of up to ₹50,000 and ₹1.5 lakhs, respectively. But there are particular home loan limits for both these benefits that you need to check to avail of them.
4) Joint Home Loan
You can easily increase the tax benefits by purchasing the property jointly with someone and adding their name to the home loan. You can search for “how to check home loan eligibility” to see if both of you qualify for the loan. By going for a joint home loan, you can claim more massive tax benefits on both principal and interest.
Apart from these home loan tax rebate, you can also apply for a tax deduction on registration and stamp duty of the purchased property. Claim all these benefits and save more money so that you can get rid of the loan soon.