A home is a long-term commitment to finance fulfilment as well as our time and efforts. To build a house of dreams takes a lot of sweat and money requirements. With secure financing options, a home loan is the only viable option to purchase a new house. Various banks and non-banking financial institutions provide home loans up to 90% of the value of the property. A home loan is provided against the mortgage of a house or property for a tenure up to 30 years.
With Pradhan Mantri Awas Yojana, economically deprived sections and middle-class income groups can avail a home loan at a subsidized interest rate. As part of the scheme, women, senior citizens and minorities are given special attention to providing home loan at concessional rates. Apart from the convenience of finance with easy EMI options and flexible tenures, a home loan also helps you to get tax deductions.
Tax Benefits for First Time Home Buyers
Individuals who are availing a home loan for their first house can get following tax deductions on principal payment as well as interest paid towards a home loan.
Tax Benefits for first time home buyers if the property is self-occupied:
- Under Sec 80 C of the Income Tax Act, first time home buyers can claim tax benefits up to Rs. 1.5 Lakhs on principal amount paid towards a home loan. If a senior citizen owns a house, they can claim an additional tax benefit of Rs. 50,000 on the principal amount of a home loan. Making use of an income tax calculator can also turn out to be helpful.
- If the house is constructed within 5 years, then home loan borrowers can claim a total deduction up to Rs. 2 Lakhs paid towards interest on a home loan. However, if the construction of a house exceeds the tenure of 5 years, you can claim tax benefits up to Rs. 30,000. Further, if a house upto Rs. 45 Lakhs is purchased till March 2020, you can claim additional tax benefits up to Rs. 1,50,000.
Tax Benefits for first time home buyers if the property is rented:
- Under Section 80 C of the Income Tax Act, you can get tax deductions up to Rs. 1.5 Lakhs if you are a property owner and are residing in another city for some business purpose and have rented the property to someone.
- Taxpayers can also get tax exemption up to Rs. 2 Lakhs or up to the value of total interest paid on all the properties which is lower for interest paid on a home loan.
Additional tax benefits under Sec 80EE: You can get tax deductions up to Rs. 50,000 if the loan is sanctioned between 1st April 2016 to 31st March 2017. However, to claim these tax benefits, the home loan should be less than Rs. 35 Lakhs and the property of the house should not exceed Rs. 50 Lakhs.
Tax Benefits on Stamp duty and Registration Charges: Stamp duty and registration charges on the house includes 8%-10% of the value of the property. You can claim tax benefits on these charges up to Rs 1.5 Lakhs for the first year.
Home Loan Tax Benefits on a Joint Home Loan: All the co-applicants who are co-borrowers of a home loan can each get tax benefits up to Rs 1.5 Lakhs on the principal amount paid towards a home loan. However, total deductions cannot exceed the total amount paid towards the home loan.
How can you claim for tax benefits on home loan: T
claim tax benefit on home loan firstly calculate the tax deduction of interest on a home loan. Next, submit your home loan interest certificate to your employer to adjust the amount for tax benefits in TDS. You can also claim for tax benefits while filing the ITR.