Buying a house is a dream for many. Most often people dedicate their entire lives saving up for their Dream Property. While funding for a property, people always tend to turn to house loans. Apart from banks offering great deals on home loans, our country’s law also offers quite a lot of privileges for those who rely on loans to invest in a property. Under section 80C of the Income Tax Act, a home loan is eligible for a tax deduction. This packs multiple tax benefits. Let’s check out a few:
- Tax deduction for interest rates
A house loan has two main components – interest payment and principal repayment. Under Section 24, the interest rate paid for the loan can be claimed as a deduction for up to a maximum amount of 2 lakh rupees. But there are a few obligations to this – the loan should be taken for the purchase or construction of a residential property that should be completed within 5 years from the financial year in which the loan was approved. - Tax deduction on principal repayment
Section 80C under the Income Tax Act allows you to deduct up to Rs. 1.5 lakh on the principal portion of the loan EMI. The catch? The option of selling your property within 5 years of possession is off the table or the deduction rate will be added back to your income in the year of the property sale. - The stamp duty and registration fee deduction
Included in the Section 80C is the option to claim a deduction for stamp duty and registration charges while still pertaining to the limit of 1.5 lakh rupees. - Section 80EEA and the additional deduction
The budget 2019 includes additional tax deduction up to 1.5 lakh for home buyers under Section 80EEA. To avail of this, the loan must’ve been sanctioned between April 2019 to March 31, 2020. - Tax benefits on joint home loans and a second property
When it comes to joint Home loans, all the borrowers included can avail tax benefits from their taxable income individually. You can claim up to 1.5 lakh rupees on the principal amount and up to Rs. 2 lakh on the interest paid. The only condition to this is that the applicant must be a co-owner of the property. Tax benefits are applicable to the payable interests in the case of a second property as well.
