Buying a home is a dream of everyone. After all, everyone needs a safe abode to live peacefully and at their convenience. However, buying a home is a huge financial investment due to high costs and other factors. This is why homebuyers take a home loan and often have queries related to the tax benefits associated with a home loan.
The Government of India has always shown a great inclination to encourage people to invest in properties. There are several government schemes that you can take advantage of while buying a home on loan. To better prepare yourself for your big investment, it is important to get familiar with the number of things you can use to your advantage when it comes to an income tax rebate on home loans.
Home Loan Tax Benefits That You Should Know
Homebuyers taking a home loan can get income tax benefits under multiple sections such as Section 24, Section 80 C, Section and Section 80 EE. These sections are beneficial for homebuyers and can provide benefits of up to Rs 5 lakh.
The income tax benefit on home loans under the applicable sections are listed in the table below
|Income Tax Act||Maximum Deductible Amount|
|Section 24||Rs 2 lakh per annum|
|Section 80 C||Rs 1.5 lakh per annum|
|Section 80 EE||Rs 50 Thousand|
Home Loan Tax Benefits Under Section 24
Under section 24, the tax exemption for the home buyer would be up to Rs 2 lakh. This exemption would be under the home loan interest category. However, there is a condition on such exemption. It requires the owner and his/ her family to reside in the property for which the loan is taken.
Home Loan Tax Benefits Under Section 80C
Section 80C is one of the favourite sections amongst taxpayers. This is because the EMI you pay as principal repayment can also be used to claim tax deductions. The maximum amount you can claim is Rs 1.5 lakhs.
If you plan to claim this deduction, you must keep the property for at least five years from the date of possession. If the property has been sold within five years from the date of possession, the deductions will be added back to your income in the year of sale.
Home Loan Tax Benefits Under Section 80EE
Section 80EE allows income tax benefits on the interest portion of the residential property loan availed from any financial institution. One can claim a maximum deduction of up to Rs 50,000 during a financial year.
You can claim this deduction until the loan is fully repaid.Section 80EE tax benefit is available on a per person basis and not based on per property.
Want to be prepared to buy your dream home?
Start saving for your down payment. You need to have at least 10 to 25% of the amount as a down payment while buying a home. If the property value is Rs 50 lakh, then you should have a corpus of around 20 lakhs ready.
Now that you know how to save tax on home loans, you can check out Ashwin Sheth Group’s residential projects in Thane West to invest in your dream home.