Home Loan Repayment

Tax Saving Home Loan Repayment

Double bonanza - Own a home and claim tax rebate

Why to invest?

If the loan is taken jointly, then each of the loan holders can claim maximum deductions for Home Loan.

Know before you invest

  • The principal portion (including stamp duty and registration charges) of the EMI is allowed as tax deduction under Section 80 C
  • In case of Self Occupied property, Interest of Home loan EMI can be claimed as a deduction from total income under Section 24 (b) up to a maximum amount of ₹ 2,00,000. If the property is out on rent, you can claim any amount you have actually paid as interest on Home Loan*. Maximum deduction under house property head is restricted to ₹ 2,00,000.
  • Additional deduction under Section 80EE is allowed to the home buyers (first-time buyers) for maximum up to ₹ 50,000.
  • Under Section 80EEA, an additional deduction of up to ₹ 1.5 lakh can be claimed, if the stamp value of the property does not exceed ₹ 45 lakh, provided loan is sanctioned between April 1, 2019 to March 31, 2020 and individual does not own any residential house property on the date of sanction.

*The ₹ 2 lakh deduction applies only if you complete the property construction within 5 years. If the construction is not completed within this period, you can claim only up to ₹ 30,000. If the property is given on rent, you can claim any amount actually spent as interest, whether it is completed or not. Maximum deduction under house property head is restricted to ₹ 2,00,000.

Home Loan Tax Benefits under Section 80C – Principal Deductions

Section 80C deals with the principal amount deductions:

  • For both self-occupied and let-out properties, you can claim up to ₹ 1.5 lakh every year as a deduction.
  • You also need to complete the construction of the property and only then claim the deduction.
  • To claim this deduction, you should not sell your house within 5 years after possessing it.
  • If you sell your house within 5 years after possession, any deduction claimed will be reversed in the year in which you sell it. This amount will also be added to your income for the year of sale.
  • If you are a co-borrower and co-owner, you can each claim up to ₹ 1.5 lakh as principal deduction.
  • You can also claim the stamp duties and registration fees paid for your property under this section.

Tax benefits under Section 80EE – Additional interest for first-time buyers

If you are buying a house for the first time, you can claim the following interest deduction in addition to the above benefits under Sections 24 and 80C:

  • You should have taken the loan between Apr 01, 2016 and Mar 31, 2017.
  • Your property must be valued at less than ₹ 50 lakh.
  • The amount of Home Loan you take must be less than ₹ 35 lakh.
  • Does not own any residential house property on the date of sanction of the loan.
  • You can claim an additional interest amount of up to ₹ 50,000 every year till you repay the loan.

Deduction for Joint Home Loan

If the housing loan is availed by two or more persons, each of them is eligible to claim a deduction on the interest paid up to ₹ 2 lakh each. Tax can be deducted on the principal paid as well for an amount up to ₹ 1.5 lakh each. However, all the applicants should also be co-owners of the property in order to claim this deduction. Hence, a joint loan can give you greater tax benefits.

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