All of us dream of owning our own home and the government has always tried to encourage citizens to invest in property. Buying a house with a home loan gives you multiple tax benefits that significantly reduce tax liability, which is why you are eligible for a home loan tax benefit under Section 80C.
Still, problems like affordability and accessibility often restrict the public to invest in homes. As a solution, the government is also coming up with many schemes and campaigns of their own. One such scheme is ‘Pradhan Mantri Dhan Jan Yojana’, ‘Pradhan Mantri Away Yojana’ and more.
Home Loan Tax Benefit Eligibility Criteria
Both owner and co-owner can apply, under tax exemption on home loans 89EEA, 80C and u/s 24 of the IT Act 1961. Check out the points mentioned below to gain a detailed idea regarding the same. We have tried to cover a whole lot of points regarding home loans and related tax benefits.
Tax Benefits on Home Loans – Earlier:
What are these tax benefits? How to avail of these benefits?
The Income Tax Act came to effect in 1961. The government of India has offered these benefits to make purchasing a home more affordable. When you take a home loan, you re-pay the principal amount along with the interest. The IT act enables you to get benefits on both components.
3 sections help you avail these benefits:
Section 80C: This section enables you to claim maximum home loan tax benefit up to Rs.1.5 lakhs on your taxable income.
Section 24: You will get a benefit of up to Rs. 2 lakhs on the payable interest rate of the current home loan. These deductions only apply if the construction of the house is finished within 5 years.
Section 80 EE: Under this section, first-time homebuyers can claim additional Rs. 50,000 on the interest every financial year. The loan cannot be more than 35 lakhs and the property should not be worth more than Rs. 50 lakhs.
Tax Benefits on Home Loans – Current Situation:
Let’s check out the pointers below to gain a detailed understanding:
- First-time home buyers will no longer be able to utilise income tax benefits under Section 80EEA as of 1st April 2022. In Budget 2019, the government had announced that home buyers can get additional Rs. 1.50 lakh tax benefits.
- Nirmala Sitharaman, Union Finance Minister, proposed in her budget speech to extend the deadline for availing of extra deductions on interest paid on home loans to 31st March 2024. This came after the government had in the previous budget extended the deadline to 31 March 2022. The extension on home loans till 31st March 2024 is applicable for all home loans sanctioned till 31st March 2022. The new tax exemption policies promote Affordable Rental Housing for migrant workers.
- Also, according to the current provisions, tax benefits apply to payable interests. The entire interest amount paid can be claimed.
- If you want to avail of home loans tax benefits from Section 80EEA, make sure to get a loan sanctioned by 31st March 2022.
How to Calculate Home Loan Tax Benefits?
The easiest way to calculate your home loan tax benefits is to always use an online calculator. It is a very quick process, all you need to do is to put in the correct details. The calculator might ask you about:
- Loan Amount
- Tenure
- Interest Rate
- Loan Start Date
- Gross Annual Income
- Existing Deduction Under 80C/D
Claim Tax Benefit on Home Loan
Here’s how you can claim an income tax benefit on home loan by following these few simple steps.
- Firstly, Calculate the tax deductions you can claim
- Secondly, Make sure the house is under your name or you are the co-applicant for the home loan.
- Thirdly, Provide the home loan interest certificate to your employer so that they can adjust your tax benefits.
- Or you can also choose to file the tax return by yourself, rather than following the steps above. Self-employed or non-salaried, applicants do not have to submit these documents anywhere. They just need to have them well organised.
But make sure to gather a fair idea about calculating your tax amount, before you start. The loan should be used for purchasing the property and not for repair, maintenance, or construction.
The sole purpose of this article was to help you realise the tax benefits you can take advantage of against your home loan. Here’s hoping, we are successful with that. At, present, there are a variety of comprehensive home loan schemes and semi subsidised arrangements available in the market, backed by adequate tax benefits (IT Acts under the government of India). However, thorough research is always mandatory before you apply for one. This will minimise the chances of potential frauds and unwanted miscommunications.
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