Home Loan Tax BenefitsNovember 16, 2018
The home loan helps to reduce the financial risk associated with buying a new home. To promote urban housing, the government provides various tax benefits for home buying. When one buys a new house on a home loan, he can avail many tax benefits. The multiple tax benefits applicable helps to reduce his tax outgo significantly.
As everybody knows, the home loan has two important components and they are:
1. Principal amount
2. Interest to be paid
The home loan borrower can avail tax benefits on both the principal and interest amount under the sections
Section 80 C
Section 80 C of the Income Tax Act deals with the repayment of the principal amount of a home loan. Under this section, the borrower can claim deductions of up to 1.5 lakh. The home buyer can claim the tax benefits under this section after the completion of construction of the house and the completion certificate is obtained from the concerned authority. No deduction is allowed on the principal amount of the home loan during the construction period of the house.
Under Section 24 of the Income Tax Act, tax benefit on the payment of interest on a home loan is applicable. The maximum limit allowed is 2 lakh. According to this section, the interest amount on housing loan shall be deducted from the income from the property.
Section 80 EE
Tax benefit under Section 80 EE is applicable only for first-time home buyers. The tax deduction is available only if the total loan amount is less than thirty-five lakh and the property price is less than fifty lakh.
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