Availing a home loan in India not only helps you fulfill your dream of owning a house but also comes with certain tax benefits. Home loan tax benefits can help you save a significant amount of money on your income tax liability. In this article, we will discuss how to avail max home loan tax benefit in India.
- Claim Interest Deduction: Home loan interest paid during a financial year is eligible for tax deduction under Section 24 of the Income Tax Act. For self-occupied property, the maximum deduction limit is Rs. 2 lakh per annum. In case of a rented property, the entire interest paid on the home loan is eligible for tax deduction.
- Claim Principal Deduction: Under Section 80C of the Income Tax Act, the principal amount paid towards the home loan during a financial year is eligible for tax deduction. The maximum limit for claiming this deduction is Rs. 1.5 lakh per annum.
- Joint Home Loan: If you are co-borrower of a home loan along with your spouse, both can claim tax deduction on the interest and principal amount paid. The limit remains the same as mentioned above.
- First-Time Home Buyer: As a first-time home buyer, you are eligible for additional tax deduction of up to Rs. 50,000 under Section 80EEA of the Income Tax Act. This is applicable for home loans sanctioned on or after 1st April 2019 and up to 31st March 2022.
- Pre-Construction Interest: Interest paid on home loan during the pre-construction period (i.e., prior to the completion of the construction of the house) is eligible for tax deduction over a period of 5 years, starting from the year of completion of construction.
- Stamp Duty and Registration Charges: Stamp duty and registration charges paid while buying a house are also eligible for tax deduction under Section 80C of the Income Tax Act.
- Additional Deduction for Affordable Housing: The government has introduced an additional deduction of up to Rs. 1.5 lakh on home loan interest paid for affordable housing under Section 80EEA. This deduction is in addition to the deductions mentioned above and is applicable for home loans sanctioned between 1st April 2019 and 31st March 2022.
It is important to note that in order to claim these tax deductions, you must provide the necessary documents such as home loan statement, payment receipts, and other relevant documents while filing your income tax returns.
In conclusion, availing a home loan in India comes with several tax benefits that can help you save money on your income tax liability. By following the above-mentioned tips, you can avail maximum home loan tax benefits and make the most of your home loan. It is advisable to consult a tax professional for personalized advice on tax planning and filing.
