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Maximum additional tax "saving" with home loan

Tax queries 137 views 1 replies

I want to confirm my following understanding:

Context:

  • Person is a private sector employee, so it means he gets HRA.
  • Person falls in 30% tax bracket
  • Person takes a home loan of 29 lakh and value of the property is 40 lakh
  • Person will not live in that property, he will either rent it or his parents will live
  • Person is already utilizing his 80C exemption
  • This is means person can only apply for a maximum of 2.5 lakh of exemption

Questions:

  • With the above-stated conditions, am I correct that the maximum exemption he can apply for is 2.5L? 
  • Considering the 30% bracket and availing an additional 2.5L exemption against the home loan, am I correct that the maximum additional saving for him will be 75,000?
  • Does it matter whether the person lives in that home or rent it out? Does it impact tax calculation?
  • Any other key consideration I am missing related to tax calculations?

If any tax expert could help clarify/confirm my understanding, it will be greatly appreciated.

Warm Regards

Replies (1)

Mostly correct........

Main point is HRA will get taxed with purchase of property.

Secondly, taxability of self occupied house and rented house differs with rent income and deduction of interest u/s. 24(b).


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