Avail Income Tax Benefits On Home Loans

21 Mar. 2023

Owning a home is an important thing in life. It is a long-cherished dream for many. There is a great increase in property prices in India. And so, buying a house on a single payment is difficult for many people. Not everybody who wants to invest in property can afford to pay it out of their pocket. People usually take home loans from banks and other financial institutions along with Income tax benefits on home loan to take some financial load off their shoulders.

Many nationalized and private banks offer housing loans. There are also some housing finance companies in India which offer Housing Loans. One of the most attractive benefits of taking a home loan is that they help you get tax benefits from a loan against property while you invest in a property. Taking a home loan makes you eligible for tax rebates under Section 80(c), 80EEA, and Section 24(b) of the Income-tax regulations.

This home loan can be used as an instrument to claim tax benefits. Therefore, if you take a home loan from a bank in order to buy a property, you will be able to get a deduction on your total income. Your taxable income becomes less, so you pay a lower amount of income tax.

The good news is that tax benefits can be claimed on both the principal and the loan’s interest amount.

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Starting date for Home Loan Tax Benefit in India in 2022

According to the income tax laws, a home loan borrower will receive two income tax benefits beginning April 1, 2022, under Sections 24(b) and 80C of the Income Tax Act. A buyer can claim an income tax deduction of up to 2 lakh on the interest component of their home loan EMI under Section 24(b). In Budget 2019, the government granted an additional 1.50 lakh income tax advantage for home loan borrowers who purchase their first home with a stamp duty valuation of up to 45 lakh. This facility was later extended for another year in budgets 2020 and 2021.

As per the tax and investment specialists, if a new home loan borrower receives a home loan sanction letter by March 31, 2022, and receives disbursement in FY23, they are entitled to claim this additional income tax exemption benefit for the duration of the home loan.

Income Tax Benefits Available on Home Loan

Section 24B

The interest payment is tax-deductible under Section 24B of the Income Tax Act of 1961. Home loan borrowers can claim tax benefits on up to 2 lakh interest payments after taking ownership of the house.

Section 80C

You can also avail tax benefits from Loan Against Property on the principal amount of the home loan as a tax deduction under Section 80C of the Income Tax Act of 1961. Section 80C allows a deduction for the principal component of the EMI paid for the year. The total sum that can be claimed is Rs 1.5 lakh. Under this section, you can also avail upto 1.5 lakh benefits on stamp duty.

Loss of Property

Excess house expenses over rental income can be deducted from your income as a property loss..

A taxpayer can deduct the interest paid on a home loan for each dwelling separately under Section 24. However, the total loss from housing property claimed in a calendar year is limited to Rs 2 lakhs.

Joint Loan Benefits

Another way of availing Income Tax benefits on a home loan is taking out a combined house loan with your parent, kid, or spouse; you can take advantage of these tax breaks simultaneously. The tax benefits are applied based on the percentage of the loan taken by each person involved in the joint loan. If the loan is obtained jointly, each borrower can deduct home loan interest up to Rs 2 lakh and principal repayment up to Rs 1.5 lakh under Section 80C in their tax returns.

So taking a joint home loan can increase your loan eligibility and maximize your tax rebate. When you apply for a joint home loan, all co-owners of the property should also be co-applicants, but the reverse need not be true.
Additional deduction under Section 80EEA
Budget 2019 has introduced an additional deduction under Section 80EEA for homebuyers. That gives benefits of up to Rs 1,50,000 to stimulate the housing sector.

To be eligible for this deduction, the property’s stamp value must not exceed Rs 45 lakh. Also, the loan must have been approved between April 1, 2019 – March 31 2022. (extended from March 31 2021). The individual does not own any other residence on the day of loan sanction, indicating that they are a first-time home buyer.

Here is Clearer understanding of all the Home Loan Tax Benefits

Deductions	Section	Maximum Deduction (INR)	Conditions
Principal	80c	1.5 lakhs	Properties should not be sold within 5 years of possession
Interest	24b	2 lakhs	The loan must be used to purchase/build a residential home, and it must be finished within 5 years of the end of the fiscal year in which the loan was received.
Stamp Duty	80C	1.5 lakhs	It can only be claimed in the year in which the expenses are incurred.
Interest	80EEA	1.5 lakhs	The property’s stamp value should be Rs.45 lakh or less. Section 80EE deductions are not available to the taxpayer.

Get The Right Property on the Home Loans

The home loan process can be tedious and tiring. Eventually, everything pays off with a gleaming smile on your loved ones when they see thier own home. Get the right property against a home loan with KGK Realty. We will assist you in finding the right home based on your current and future needs. Explore several properties and find your perfect home with us. Get in touch with us for further assistance in investment and home loans.