Home Loan Income Tax Benefits 2024
Most of the banks offer home loan on different interest rates to their customers. For those who don’t have enough funds to buy their own home can borrow a home loan to buy their dream home. Home loan is the most convenient and simple way to buy a home for your family and loved ones. But, this is really important that before landing into the soup you should understand all terms and conditions and complexities in advance to get maximum benefits out of your home loan. Home loan is not like car loan or personal loan which has just a liability of repayment, besides it offers you the benefits and advantages in tax deductions. At the time of borrowing a home loan you should remember that you can avail tax benefits until the tenure of repayment.
The New Personal Income Tax Rates
“Present burden of taxation is on tax payer and salaried employees. Post-demonetisation, there is an expectation of these people for their burden to be reduced,” says Jaitley.
What are the new income tax slabs?
For income of Rs 2.5 lakh to Rs 5 lakh – 5% instead of 10%. (This reduces tax liability of all people below Rs 5 lakh to zero or 50% of existing liability).
Advance Tax on Personal Income Tax Increased
Due to #Demonitisation advance tax on personal Income tax increased by 34.8%: FM Jaitley
Home loan income tax benefits can be divided into two major categories:
- Principal repayment under Section 80C
- Home loan interest repayment under Section 24
Principal repayment under Section 80C: The amount paid as repayment of the principal amount by an individual or by the co-borrowers is allowed for tax deductions under section 80C of the Income Tax Act. Besides, the amount paid for stamp duty and registration can also be claimed under section 80C in that respective year only. This is one time claim. The maximum tax deductions under section 80C is Rs. 1.5 lakh. There is a clause in this section, the deduction under section 80C can be claimed only if the construction of the home is complete or after the possession of the home. You can’t claim tax benefits during the year of construction of home. If you sell that property for which you are claiming tax benefits within 5 years of purchase, doing so will not allow you to claim tax benefits anymore under Section 80C from the year you sell-off your property.
Home loan interest repayment under Section 24: You can claim tax benefits on home loan for repayment of interest under section 24. The maximum tax deduction under this section is Rs. 2 lakhs, if the property is self-occupied and there is no-limit for deductions if the property is not self-occupied. But, if the property is not self-occupied by the owner because of his employment reasons, in that situation the maximum deductions under this section is Rs. 2 lakhs only. You can borrow a home loan to buy a property in other state as well and avail tax benefits on the same.
The Quantum of Deduction allowed for payment of Interest on Home Loan under Section 24 has been summarized below:-
| Type of Property | Self Occupied Property | Not Self Occupied Property | ||
| Completion Status | Completed within 3 years | Not completed within 3 years | Completed within 3 years | Not completed within 3 years |
| Deduction Allowed | Rs. 1,50,000 | Rs. 30,000 | No Limit | No Limit |
This is only allowed when you live in that house.
Besides, above two major parameters home loan can further help you in many ways to save tax under below categories such as:
- Income tax pre-construction interest
- Home loan interest for the first time borrowers Section 80EE
Income tax benefits on pre-construction interest: There are many people who invested their money in under-construction properties, where they will get possession in next three to five years. In such case, they pay interest on the loan amount, but can’t claim the tax benefits until they get the possession. Therefore, after getting the possession they can claim the tax benefits in five successive installments in the same year, begining from the year of construction. But if you will not get the possession within three years, you will get disqualified to claim the tax benefits for those years of constructions.
Home loan interest benefits for the first time borrower: From the year 2013, government has introduced a new section in the income tax for the first time buyers. The maximum loan amount allowed for the property for first time buyers should not exceed Rs. 25Lakhs. The assessee does not own any other house on his/her name at the time of borrowing the loan. You can get tax benefits of upto Rs. 1 lakh under this 80EE section.
Benefits of having a Co-borrower if he/she is earning for Income Tax
If both husband and wife are working and you are opting for a home loan as a borrower both of you are eligible for tax exemption for your share of the EMI Paid.
For claiming income tax deduction, the EMI amount is divided into the principal and interest components. The repayment of the principal amount of loan is claimed as a deduction under section 80C of the Income Tax Act up to a maximum amount of Rs.1 lac individually by each co-owner.
