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Home is where the heart is! If this isn’t true, then what is? But, as long as we are here, we need to be making our environment as comfortable and as secure as possible, and it is a very important attribute. But it’s not always possible to stack up that much cash to make up for a secure and beautiful home, and that’s why Home loans become beneficial in certain ways. Also, home loans are not just used for buying they are utilized for a variety of purposes. But, do you know the main benefit that people opting for home loans get? It has a skyrocketing benefit – the tax benefit! Let’s find out more about these tax benefits and understand more about home loans.
Major Tax Benefits of Home Loans
With added income tax benefits on home loans announced by the Union Minister of Finance in India, you can enjoy tax benefits under the old tax regime. This can be through exemptions and deductions. The tax benefit of home loans is explained in detail over here.
Repayment of Principal Amount
There are two contents of EMI that you pay – one is the principal amount, and the other is the interest on it. For a self-occupied property, you can claim the amount that you repaid on account of principal in the EMI as a deduction under Section 80C. If you have a second house, in which your parents stay, or it’s empty – it will also come up to be your self-occupied property.
You will be eligible for a tax deduction of 1.5 lakhs on your principal amount of the EMI for both of the houses. The ones that were bought using home loans. If the second house is rented – it is known to be a let-out property, and you will still be eligible for home loan tax benefits. You could also clean the registration and stamp duty charges that were incurred when you bought your house.
Payment of Interest
Tax deduction on a home loan includes the interest paid on the loan. Under Section 24, you will be eligible for a home loan tax benefit of up to 2 lakhs for a self-occupied home. When you have a second home – it is the complete tax deduction on a home loan for two houses and should not exceed 2 lakhs in a financial year.
If you have a let-out property then you wouldn’t have any maximum limit to claim the interest. Still, the loss you claim under the Income from House Property is limited to 2 Lakhs. The remains of the loss can be carried forward for a period of 8 years for adjustment against income from house property.
Other Benefits of Home Loans
There are some other benefits to home loans, and here they are.
Liquidity Benefit:
When you face a crunch of liquidity – you will be forced to take a financing facility. It could be a personal loan, or collateralized loan, and more. But it would cost you more. You can use a personal loan EMI calculator to look that up. So, why not use your funds and live up to that crunch. These funds can protect you.
Due diligence of the property by the bank:
A bank exercises strict due diligence before they Finance a project. It is something that would reduce your risk to a great extent. They would verify the project documents, titles, and legal clearances before they approve the loan. So, when you do take a home loan from the bank, it becomes more secure than an unapproved project.
There actually are more benefits than this to a home loan, and if you are taking up a home loan, it’s not a bad idea.
Additional Tax Deductions in a Home Loan
1. You can get the home loan tax benefit if you have taken a loan. Under the Section 80EE, you will be eligible for an additional deduction of 50,000 along with the deduction of 2 lakhs on interest provided, but still, you must satisfy the following condition:
The amount of the loan can’t exceed 34 lakhs. The value of the property against which you have taken the loan should be 50 lakhs. This deduction is only applicable to residential property and first-time house owners.
2. You can claim an added deduction of 1.5 lakhs on the interest you paid on the home loan. You can gain this home loan tax benefit under the Section 80EEA, and you must meet the following conditions:
- The stamp value of a residential property – which must be at max 45 lakhs.
- You must be a first-time home buyer.
- In order to claim the deduction under the section, you should also be eligible to claim deduction under Section 80EE.
Joint Home Loan
If you have a joint home loan account, you can claim the home loan tax benefit of taxable income. When you are a borrower of a joint home loan should be joint owners of the property and can also claim deductions of up to 2 lakhs on interest and 1.5 lakhs each on the principal amount of the loan.
Well, these are just the tax benefits of home loans, but they’re more of it, and here is a gist of it for you.
Conclusion
These are the Tax Benefits of availing a home loan. You can get tax benefits on the principal amount and the interest you repay, so why not enjoy the benefits of debt.