What if we told you a way that you could buy a house, with a home loan and save some money in the process? If you have this aspiration, then this is your lucky day.
While we all want our home, it is sometimes not possible to do so with the amount of funds we have. Your next best option is a home loan.
Additionally, the government has also shown a great inclination to encourage citizens to invest in homes. In fact, income tax rules make it easy to claim tax deductions on home loan repayments and associated costs. So in a win-win situation, a housing loan gives you tax benefits while you save big on not paying rent. However, due to lack of awareness about home loan tax benefits, existing and potential home buyers are missing on a great opportunity. If this has caught your attention, read on to know the details about the tax benefits:
Deduction for stamp duty and registration
Claiming tax deduction for home loan starts as early as your stamp duty and registration of your new house. This falls within the overall limit of Rs 1.5 lakh (the same bracket as principal repayment tax sop). You can claim the deduction for stamp duty and registration in the year in which these expenditures were incurred.
Additional Read: Top Things To Know About Registration Of A New Home
Deduction for interest paid
When you avail a home loan, you repay the principal and the home loan interest. This is a universal fact. The interest portion of the EMI on a home loan paid for the year can be claimed as a deduction from your total income. This claim can be up to a maximum of Rs 2 lakh. This interest paid deduction can be claimed from the year in which construction of the house is completed.
Many of Tata Capital’s customers also availed a home loan for an under construction building. And they were able to avail a tax benefit on the interest paid. If you, too, have bought an under-construction property and have not moved in yet, you can still claim tax benefits on interest paid. Since you are paying your home Loan EMIs, the pre-construction interest tax sops are allowed. You can claim this as a deduction in five equal installments starting from the year in which the property is acquired, or construction of the property is completed. The maximum home loan eligibility, in this case, is capped at Rs 2 lakhs.
Deduction on principal repayment
The principal portion of the housing loan EMI paid for the year is also allowed as deduction. The maximum amount that can be claimed as this deduction is up to Rs 1.5 lakh a year. Do remember that if you claim this deduction, the house property should not be sold within five years of possession. If you do sell out within five years, deductions are reversed and added to your income.
Deduction for a joint loan
Many families these days are double-income i.e. both spouses have regular earnings. If a housing loan is taken jointly by such a couple, then each of the borrowers can claim a deduction for home loan interest up to Rs 2 lakh each and principal repayment of up to Rs 1.5 lakh each. This has twin benefits: one they can buy a bigger and expensive home, and they can get a larger tax benefit. To claim this deduction, the borrowers need to be the co-owners of the property taken on the home loan.
Additional Read: What Are The Benefits Of Joint Home Loans?
Tax benefits are one of the biggest advantages of a housing loan. Simple awareness and a little bit of knowledge help you to take benefit of tax rebates on housing loan. This, in turn, reduces an individual’s tax burden. If this is your aspiration, then reach out to Tata Capital and apply for a home loan online. It is time to make your aspirations come true!