You need to consider a lot many factors before you finally decide to buy your own house. While making this big decision of our lives, we often forget to consider the home loan tax benefits we could avail. Have you ever wondered how you can avail of this home loan tax benefit? To help you out in this, we have a lot of ways by which you can actually get a home loan tax benefit and use it to your advantage.
Some of The Important Tax Benefits You Must Know are listed below:
Tax Deduction while you repay interest:
The home loan you get is generally repaid through EMIs. As per Section 24 of the Income Tax Act, you can claim a deduction on the interest repaid. While if you live in the property, you have paid interest for; you can claim for a deduction of up to Rs.2 lakh per year.
Tax Saving offered on Principal Repayments
According to section 80C of the Income Tax Act, you can also avail tax deduction on the principal portion of the EMI. You can easily get Rs 1.5 lakh under this section.
More Tax Benefit for first time home buyers
As per the latest budget announcement in July 2019, under section 24 first time home buyers for a loan up to Rs. 45 lakhs can claim additional interest deduction of Rs. 2 lakhs till 31st March 2020.
Registration Charges and Stamp Duty
Stamp duty and registration charges come hand in hand when you opt for buying a new house. Although you can also avail of a tax benefit on these accumulated expenses. Section 80C allows you to get a deduction of up to Rs.1.5 lakh when you have spent money on such expenses. The matter of the fact that you need to keep in mind is that you could claim this deduction only when you have paid these charges during that particular financial year you are willing to save your tax for.
Tax Concession offered on Pre-Construction
Being the owner of the house, you can avail a deduction on interest payments. The point here to make note is that the deduction could only be claimed in the year your house is built. The Indian tax law allows you to claim the deduction in five equal installments. Also, you can reap the pre-construction tax benefits of Rs.2 lakh a year though.
Tax Saving in case you are a joint owner
These days people are going for a joint loan with their parents or spouses as it offers great tax benefits. Each of you and your spouse can get a deduction up to Rs.2 lakh on interest payment, in case you go for a joint loan. To be eligible for this deduction, it is a necessary condition for you both to be the joint owners of the property. In such a scenario you can each claim a deduction of up to Rs.1.5 lakh on principal repayment individually.
You do not go for buying a new house on a regular basis; this is a one-time deal and should be made with complete cautiousness. Thus, these tax benefits offer you a lot of financial relief, and you can make the best possible deal in your budget. It would be more beneficial for you if you make the payments on time during the tenure of your loan.