Amidst the ongoing crisis, everyone is looking for ways in which one can save money. Did you know you could do that with home loans? There are various tax deductions that you might be eligible for, allowing you to claim as much as Rs 7 Lakh.
Let’s take a look at some of the tax deductions you can claim on your existing home loans.
Section 80C
Under Section 80C of the Income Tax Act, borrowers are eligible for deductions of up to Rs 1.5 Lakh for repayment of the principal component in a home loan. If the loan was taken for construction of property, then you will be eligible only if it was completed within five years from the time the loan was taken.
Section 24b
Section 24b allows you to claim tax rebates of up to Rs 2 Lakh on the interest amount of the home loan. However, this cap does not apply to properties that are rented out.
Read More: All You Need to Know About Tax Exemptions on Multiple Home Loans
Sections 80EE and 80EEA
First-time homebuyers can take advantage of Section 80EE, which offers a deduction of Rs 50,000 on interest paid in addition to the Rs 2 Lakh allowed under 24b. For borrowers considering affordable housing, the additional amount is set at Rs 1.5 Lakh under Section 80EEA provided the value of the house is capped at Rs 50 Lakh.
Additionally, the stamp duty should amount to Rs a maximum of 45 Lakh.
Joint home loans
Joint home loans enhance your eligibility criteria as both parties can claim tax deductions on the principal and interest on an individual basis, and you stand to gain up Rs 7 Lakh.
How to claim tax benefits?
- Ensure that the papers related to the property are in order and that they reflect your ownership. In the case of joint ownership, the documents should state the percentage of your share clearly.
- The date of the completion of construction or purchase of the property must be clear as the deduction of tax is claimed based on these dates.
- Your status as the primary borrower or co-borrower must be stated.
- Procure a certificate from the bank, which outlines the details of your principal amount and interest.
- Ensure that you have paid municipal taxes if any to be eligible for the deduction of the same.
- Submit the documents to your employer to adjust TDS.
Don’t forget to download our comprehensive Home Loan Guide.
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