Ajay Kumar Maggidi
Quick Summary
Having own house is everyone’s dream. Government also encouraging individuals to have own houses through providing tax benefits on home loan. Besides Income tax benefits govt also providing Interest subsidy up to 2.67L under PMAY Housing for all scheme. It boosts real estate sector thereby creates employment opportunities in real sector. This article aims to enable you to device your Investment strategies effectively with informed decisions.
Income tax act provides tax benefits to borrowers of home loan with respect to principal repayment, interest payment and registration charges as below
Tax Savings on Principal Repayment
- Tax Benefit on repayment of principal Part of Home Loan & stamp duty and registration charges
- Deduction of principal repayment & stamp duty and registration charges maximum up to 1.5L
Conditions
- House property must be possessed for at least 5 years
- Stamp duty and registration charges can be claimed only in the year charges of incurred
Tax Savings on Interest Payment
Section 24
Tax Benefits
- Interest deduction up to 2L for self occupied properties
- No ceiling limit for rented out properties
Conditions
- Loan may be taken for purchase or construction of the house property
- Deduction is allowed after completion of construction of house property
- If Construction, it must be completed within 5 years from financial year in which loan was granted
- Interest part of under construction period shall be allowed in five equal installments after completion of construction.
Section 80EE
Tax Benefits
- Tax Benefit on Interest Part of Home Loan
- Deduction of Interest up to 50K in addition to section 24
Conditions
- Loan must be taken from Financial Institutions only
- Loan Sanctioned Period - 01 April 2016 to 31 March 2017
- Shall not own any other house property on the date of sanction of loan
- Value of the house shall not exceed 50L
- Loan Amount shall not exceed 35L
Section 80EEA
Tax Benefits
- Interest deduction up to 1.5L
- This deduction over and above to deduction available u/s 24
Conditions
- Loan must be taken from Financial Institutions only
- Loan Sanctioned Period - 01 April 2019 to 31 March 2021
- Shall not own any other house property on the date of sanction of loan
- Value of the house shall not exceed 45L
- Shall not be eligible claim deduction u/s 80EE
FAQ :
You can claim a deduction for the repayment of the principal part of your home loan, along with stamp duty and registration charges, up to a maximum of £1.5 lakh. However, this is only applicable if you possess the house property for at least five years, and stamp duty and registration charges can only be claimed in the year they were incurred.
For self-occupied properties, you can claim an interest deduction of up to £2 lakh under Section 24 of the Income Tax Act.
Yes, there is no ceiling limit for claiming interest deductions on home loans for properties that are rented out.
Under Section 80EEA, you can claim an interest deduction of up to £1.5 lakh, in addition to Section 24 benefits. This applies if the loan was taken from financial institutions between 1 April 2019 and 31 March 2021, you didn't own any other property on the loan sanction date, the house value doesn't exceed £45 lakh, and you are not eligible for deduction under Section 80EE.
Interest paid during the period of construction can be claimed in five equal instalments after the completion of construction. The deduction is allowed after the construction is completed, provided the loan was taken for purchase or construction.
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