The Indian government gives several tax breaks for mortgage loans. Under the 1961 Income Tax Act. The objective of this tax benefit is to encourage citizens to invest in real estate. It is crucial to be aware of all the Home Loan tax benefits because doing so can enable you to significantly reduce your tax obligations as per your Home Loan interest rates.
Tax Advantages on Home Loan (FY 2022-23)
1. Tax benefits on the repayment of the principal amount under Section 80C
A maximum of Rs. 1.5 Lakh tax benefit is available to the borrower upon principal payments of the Home Loan. This amount will be deducted from your annual taxable income. This tax benefit covers both privately owned homes and rented units. Stamp duty and registration fees are also included in the tax deduction. However, it can only be asserted once.
2. Section 24 Home Loan Tax Benefits – Interest Payment
Income Tax Section 24(b) Act allows you to get a deduction on your taxable income via interest paid on your Home Loan. Each year, you can save up to Rs. 2 Lakh from your gross income for a self-occupied house. If you own two properties, your total tax deduction for mortgage interest can be up to Rs. 2 lakhs in one financial year.
3. Tax Deduction On Interest Paid For Property That Is Under Construction
If you have acquired a property that is still being built and are making monthly EMI payments, you can deduct the interest on the Home Loan when the building is completed. Under the Income Tax Act of 1961, pre-construction and post-construction phase interest may qualify for the tax deduction.
Interest in the pre-construction phase may be deducted in five equal annual installments beginning with the year the structure is completed. As a result, the total interest deduction that a taxpayer may claim under Section 24(b) is equal to one-fifth of the pre-construction period interest plus the post-construction period interest.
4. Section 80EE Home Loan Tax Benefits: Additional Deduction
First-time purchasers are eligible for an income tax benefit on mortgage interest under Section 80EE in the following circumstances:
This deduction is granted if the cost of the property is under Rs. 50 Lakh and the loan is under Rs. 35 Lakh. The loan must have been approved between April 1, 2016, and March 31, 2017. The benefit of this deduction is available as long as the loan is still being paid.
5. Interest on Home Loans: Home Loan Tax Benefits under Section 80 EEA
You may additionally deduct up to an additional Rs. 1.5 lakh for the interest on your mortgage. The following conditions must be satisfied for you to be eligible for the Section 80 EEA Home Loan tax benefit:
- The loan must be authorized between April 1, 2019, and March 31, 2022.
- The house property’s stamp duty value should be less than Rs. 45 Lakh.
- Individual taxpayers should be able to use something other than the current Section 80EE to deduct expenses.
- You can claim the deduction if you and your spouse jointly own a piece of property and make loan repayments.
- Residents and non-residents alike may benefit under Section 80 EEA.
- The clause does not state whether the residential property must be used for self-occupation to qualify for the deduction. It indicates that a deduction may be claimed under this clause even without holding possession.
6. Primary and Co-borrower are eligible for Home Loan tax benefits under Sections 24 and 80C.
When a Home Loan is obtained jointly, each borrower can deduct their principal and interest payments up to Rs. 1.5 Lakh under Section 80C and up to Rs. 2 Lakh under Section 24(b).
A Home Loan costs a lot, but if you utilize it intelligently, you may minimize your debt and maximize your tax deductions. There are numerous ways to lower your tax obligations while saving money, which can increase your net worth. Most of these tools can be used for investment purposes, reducing expenses and boosting revenue. Determine which loan would be the best Home Loan in India per your requirements.