I want to buy:
You might have heard about the huge benefits of taking a home loan, but do you have any idea what exactly it is. They say bigger is always better but the statement is simply misleading if you are not aware of the terms and conditions.
There are certain things that you need to know before signing on the dotted lines. Any decision made in a jiffy can leave an adverse effect.
For instance, you are planning to buy a sky villa in Mohali, the tax rebate will start immediately.
To make it easier for you, we have created a list of tax benefits of Home loans.
Deduction on repayment of principal amount of home loan
The EMI you pay includes the principal amount and the interest. The amount repaid as the principal component can be claimed as a deduction under section 80C of the Income Tax act 1961.
If you have any other house that is vacant or if your parents are living in it, that can also be considered as a self-occupied house. Any house loan on that is also eligible for tax deduction.
Deduction on Interest paid on house loan
Apart from the principal amount, a taxpayer can also claim tax benefits on the interest paid. The deduction is available under section 24 upto Rs 2 Lakh.
Same as above, if you own two houses and your parents are residing in the second house, the interest amount can be claimed under section 24.
Extra deduction on buying an affordable house
If the house is bought under any affordable housing category, then an additional tax rebate can be claimed on the interest paid on the house loan of that house. The taxpayer can claim a maximum deduction of Rs 3.5 lakh in a financial year in case of buying an affordable house.
Deduction under Section 80EE
Reintroduced in FY 2016-17, the section offers an extra tax benefit of Rs 50,000 to those homeowners who have taken a home loan in FY 2016-17 under section 80EE. However, the maximum gross income of the taxpayer should be Rs 2 Lakh per annum or less.
In short, you can plan your purchase looking at the additional benefits of the home loan.